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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
{X} Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended January 30, 2000
or
{ } Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from ________to_________
Commission File Number 0-8690
Datametrics Corporation
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-3545701
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25B Hanover Road
Florham Park, New Jersey 07932
------------------------ -----
(Address of principal executive offices) (Zip Code)
(973) 377-3900
--------------
(Registrant's telephone number, including area code)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 Par Value -- 18,997,227 shares as of 3/20/00
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<PAGE>
DATAMETRICS CORPORATION AND SUBSIDIARIES
Index to Form 10-QSB
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet as of January 30, 2000 3
Consolidated Statements of Operations for the Three
Months Ended January 30, 2000 and January 24, 1999 4
Consolidated Statements of Cash Flows for the Three Months
Ended January 30, 2000 and January 24, 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II - Other Information
Item 1. Legal Proceedings 8
Item 2. Changes in securities and uses of proceeds 8
Item 3. Defaults upon Senior Securities 8
Item 4. Submission of matters to a vote of security holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
2 of 9
<PAGE>
DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
January 30, 2000
<TABLE>
<CAPTION>
(in 000s except for share date)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 579
Accounts receivable, net 760
Inventory, net 3,290
Prepaid expenses and other current assets 1,038
------
Total Current Assets 5,667
Property and Equipment, at Cost:
Land 420
Building 1,042
Machinery and equipment 3,380
Furniture, fixtures & computer equipment 2,623
Leasehold improvements 86
------
7,551
Accumulated depreciation and amortization (5,609)
-------
Net property and equipment 1,942
Inventory, Net 2,739
Other Assets 890
------
11,238
======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit 1,451
Current maturities of long-term debt 5,893
Accounts Payable 843
Accrued expenses 570
------
Total Current Liabilities 8,757
Long-Term Debt, less current maturities 916
Loan Payable 800
------
Total Liabilities 10,473
------
Commitments and Contingencies
Stockholders' Equity
Common stock, $.01 par value - 40,000,000 shares
authorized; 18,997,227 shares issued and
outstanding in 2000 190
Additional paid-in capital 42,702
Accumulated deficit (42,127)
--------
Total Stockholders' Equity 765
-------
$11,238
=======
</TABLE>
See accompanying notes.
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<PAGE>
DATAMETRICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For Three Months Ended
January 30, January 24
2000 1999
-----------------------------------------------
(In thousands, except for per share data)
<S> <C> <C>
Sales $ 1,131 $ 1,586
Cost of sales 1,391 1,084
Selling, general & administrative 641 929
Lease settlement expense --- 1,225
-----------------------------------------------
Loss from operations (901) (1,652)
Interest expense, net (451) (124)
-----------------------------------------------
Net Loss (1,352) ($1,776)
===============================================
Loss per share of common stock
Basic and Diluted $ (.07) ($0.11)
===============================================
Weighted average number of shares outstanding
Basic and Diluted 18,997 16,578
===============================================
</TABLE>
See accompanying notes.
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<PAGE>
DATAMETRICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
For Three Months Ended
January 30, January 24
2000 1999
------------ ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,352) $ (1,776)
Adjustments: to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 90 121
Non-cash interest and financing costs 231 -
Changes in assets and liabilities
Accounts receivable 1,631 (308)
Inventory (87) (281)
Prepaid expenses and other current assets (259) 45
Other assets 281 48
Accounts payable (97) (10)
Accrued expenses 65 1,135
-------------------------------
Net cash provided by (used in) operating activities 503 (1,026)
-------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (56) ---
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving line of credit 500 426
Payments on revolving line of credit (500) (2,095)
Payment on capitalized lease obligations -- (17)
Borrowings on long-term debt -- 3,450
Payments on long-term debt (5) ---
Exchange of 7% Convertible Debentures -- (1,750)
Exchange of Senior Subordinated Debentures -- (500)
Proceeds from the issuance of common stock and warrants -- 1,559
-------------------------------
Net cash (used in) provided by financing activities (5) 1,073
-------------------------------
Net increase in cash and cash equivalents 442 47
Cash and cash equivalents at the beginning of the period 137 228
-------------------------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 579 $ 275
===============================
Cash paid during the period for:
Interest $ 150 $ 37
Non-cash transactions ===============================
Exchange of 7% Convertible Debentures for 10%
Senior Subordinated Notes Due 2000 $ --- $(1,750)
Exchange of Senior Subordinated Debentures for ===============================
10% Senior Subordinated Notes Due 2000 $ --- $ (500)
===============================
See accompanying notes.
</TABLE>
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<PAGE>
DATAMETRICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 30, 2000
(Unaudited)
1. The consolidated financial statements include the accounts of Datametrics
Corporation and its wholly-owned subsidiaries (collectively, the "Company").
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission for the requirements of the Quarterly Report on Form
10-QSB. 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
consolidated financial statements be read in conjunction with the statements and
notes thereto included in the Company's latest Annual Report on Form 10-K for
the fiscal year ended October 31, 1999 as 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, including results for the fiscal year
ending October 31, 1999.
2. INVENTORIES. Stockroom inventories consist primarily of materials used by the
Company for existing and anticipated contracts and materials and finished
assemblies which are held to satisfy spare parts requirements of the Company's
customers. Those parts not expected to be sold within one year are classified as
a non-current asset. The Company does not amortize its non-current inventory,
but the Company evaluates all inventory for obsolescence on a periodic basis and
records estimated reserves. Inventories as of January 30, 2000 consist of the
following:
Inventories of parts and sub-assemblies $ 10,625
Work in process 130
Finished Goods 774
---------
11,529
Less non current inventories (2,739)
Less reserve for obsolescence (5,500)
----------
$ 3,290
==========
3. SALE OF THE MILITARY BUSINESS.
In January 2000, the Company's Board of Directors approved the sale of the
Company's military business. The Company is seeking to sell the entire
inventory, customer lists and manfacturing drawings and specifications related
to this line of business. The Company has redirected its efforts exclusively to
the manfacturing and marketing of the Condor(TM) and Harrier(TM) high speed
thermal transfer printers and the management and operations of its
internet-based MadeMyWay.com(TM). In January 2000, the Company also terminated
approximately 30 employees. Severance was insignificant and there were no other
exit costs related to the planned disposition of the military business incurred
as of January 30, 2000.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Three Month Period Ended January 30, 2000 Compared
To Three Month Period Ended January 24, 1999
Sales for the three-month period ended January 30, 2000 were $1,131,000, a
decrease of $455,000 or 29%, compared with sales of $1,586,000 in the same
period in the prior fiscal year. The decrease in sales for the first quarter
ended January 30, 2000 is attributable primarily to lower than anticipated
orders from the Department of Defense and prime contractors for the Department
of Defense.
Cost of Sales for the first quarter of fiscal 2000 was $1,391,000 (123% of
sales), an increase of $307,000 or 28%, compared with $1,084,000 for the same
period in the prior fiscal year. Cost of sales increased due to excess plant
capacity resulting primarily from decreased military-related business.
Selling, general and administrative ("SG&A") expenses for the three
month period ended January 30, 2000 were $641,000 (57% of sales) a decrease of
$288,000, or 31%, compared with $929,000 (59% of sales) for the same period in
the prior fiscal year. The decrease is due to lower administrative and support
staff expenses throughout the Company.
Net interest expense amounted to $451,000 for the three month period
ended January 30, 2000 compared with net interest expense of $124,000 for the
same period in the prior year. The increase is due to higher outstanding
borrowings and original issue discount related to the Company's issuance of
warrants in fiscal 1999.
The net loss for the three-month period ended January 30, 2000 amounted
to $1,352,000, an decrease of $424,000, compared with net loss of $1,776,000 for
the same period in the prior year. The decrease in the loss was primarily
attributable to the lease settlement expense in the prior year more than
offsetting the reduction in sales in the current period.
Management has determined that, based on the Company's historical
losses from recurring operations, the Company will not recognize its net
deferred tax assets at January 30, 2000. Ultimate recognition of these tax
assets is dependent, to some extent, on future revenue levels and margins. It is
the intention of management to assess the appropriate level for the valuation
allowance each quarter.
The contract process in which products are offered for sale is
generally set before costs are incurred, and prices are based on estimates of
the costs, which include the anticipated impact of inflation.
The Company's backlog of funded orders not yet recognized as revenue at
October 31, 1999 was approximately $2,559,000. At January 30, 2000, the backlog
was approximately $2,181,000. Approximately 75% of the January 30, 2000 backlog
is expected to be delivered during the next twelve months.
7 of 9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company utilizes various computer software packages as tools in
running its accounting operations. The Company has incorporated Year 2000
("Y2K") compliant computer programming language into its software package. The
investment required for its mainframe and critical hardware equipment to be Y2K
compliant was not significant. Y2K issues have not manifested themselves in the
Company's computers, nor has any Y2K problem resulted in an interruption in
normal business activity. The Company continues to monitor and assess the risks
of future Y2K associated program failures. However, due to the inherent
uncertainty of the Y2K issue and dependence on third-party compliance, no
assurance can be given that potential future Y2K failures will not adversely
effect the Company's operations, liquidity and financial position.
FORWARD LOOKING STATEMENTS-CAUTIONARY FACTORS
Except for the historical information and statements contained in this report,
the matters set forth in this report are "forward looking statements" that
involve uncertainties and risks, some of which are discussed at appropriate
points in this report and the Company's other SEC filings, including the fact
that the Company is engaged in supplying equipment and services to U.S.
government defense programs which are subject to special risks, including
dependence on government appropriations, contract termination without cause,
contract renegotiation and the intense competition for available defense
business.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is, from time to time, the subject of legal litigation,
claims and assessments arising out of matters occurring during the normal
operation of the Company's business. In the opinion of management, the
liability, if any, under such current litigation, claims and assessments would
not materially affect the financial position or the results of operations of the
Company.
During the first quarter of the fiscal year, the appeals periods in the
matter previously reported involving four former officers of the Company expired
and the decision of the California Court of Appeals in favor of the Company
became final. The only remaining proceeding in this litigation is the Company's
request for an award of its attorney's fees incurred in the course of the
litigation.
ITEM 2. CHANGES IN SECURITIES AND USES OF PROCEEDS.
As of December 2, 1999, the Company issued 12% Subordinated Convertible
Secured Notes for total face value of $102,000 in exchange for short term notes
in that principal amount. Such notes were in the form of the $2,300,000 of such
notes previously reported and issued in August 1999.
As of December 31, 1999, the Company issued 12% Subordinated
Convertible Secured Notes for total face value of $71,400 to the holders of such
notes previously reported exercising the right of the Company to do so in lieu
of cash interest payments on the existing Notes.
In December 1999 the Company granted its chief executive officer Daniel
Ginns warrants for an additional 700,000 shares at an exercise price of $1.25
per share, in part to relieve the Company of the effect of some of the
anti-dilution provisions in Mr. Ginns employment agreement. All of these
warrants are immediately exercisable and have a term of five years.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
At January 30, 2000, the Company was in violation of a financial
covenant to Branch Banking & Trust Co. relating to the ratio of total
liabilities to tangable net worth.
8 of 9
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
ITEM 5. OTHER INFORMATION. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits: Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
On December 15, 1999, the Company filed a Current Report on
Form 8-K with the Securities and Exchange Commission which
reported as Item 5 the resignation of Adrien A. Maught as
President and Director of the Company, and the appointment of
Larry B. Silverman as the Company 's Controller and Chief
Accounting Officer.
On January 28, 2000, the Company filed a Current Report on
Form 8-K with the Securities and Exchange Commission which
reported as Item 5: (i) the resignation of Richard Love as a
Director of the Company; (ii) the announcement that the
Company would commence efforts to seek buyers for its
military/defense business and redirect its efforts to (a) the
manufacture and marketing of the Condor(TM) and Harrier(TM)
high-speed thermal transfer printers and (b) the management
and operation of MadeMyWay.com(TM), an internet-based
subsidiary of the Company engaged in the fulfillment of
customized and personalized apparel, textiles and specialty
imprinted products primarily for the business-to-business
e-commerce market; and (iii) the approval of the Board of
Directors of a change in the Company's name to Mach 5
Technologies, Inc. The name change will be presented for
approval at the next annual meeting of the Company's
shareholders.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Form 10-QSB to be signed on its behalf by its
duly authorized representatives.
DATAMETRICS CORPORATION
-----------------------
(Registrant)
Dated: March 20, 2000 /s/ DANIEL P. GINNS
---------------------------
Daniel P. Ginns
Chief Executive Officer and
Chief Financial Officer
Dated: March 20, 2000 /s/ LARRY B. SILVERMAN
---------------------------
Larry B. Silverman,
Chief Accounting Officer
9 of 9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS OF DATAMETRICS CORPORATION AS OF
AND FOR THE THREE MONTHS ENDED JANUARY 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-30-2000
<CASH> 579
<SECURITIES> 0
<RECEIVABLES> 760
<ALLOWANCES> 50
<INVENTORY> 3,290
<CURRENT-ASSETS> 5,667
<PP&E> 7,551
<DEPRECIATION> 5,609
<TOTAL-ASSETS> 11,238
<CURRENT-LIABILITIES> 8,757
<BONDS> 0
<COMMON> 190
0
0
<OTHER-SE> 2,117
<TOTAL-LIABILITY-AND-EQUITY> 11,238
<SALES> 1,131
<TOTAL-REVENUES> 1,131
<CGS> 0
<TOTAL-COSTS> 2,032
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 451
<INCOME-PRETAX> (1,352)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,352)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
