<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 0-9998
THE METAL ARTS COMPANY, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 06-0945588
------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1 American Center, Geneva, New York 14456-1188
--------------------------------------- ----------
(Address of principal executive offices) (Zip 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
The number of shares of common stock, $.01 par value, outstanding at
September 30, 1995 was 7,307,402.
Page 1 of 12 Pages
Exhibit Index is on Page 2
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THE METAL ARTS COMPANY, INC.
I N D E X
Part I Financial Information:
Consolidated Condensed Balance Sheets,
September 30, 1995 and June 30, 1995. 4 and 5
Consolidated Condensed Statements of
Operations, three months ended
September 30, 1995 and 1994. 6
Consolidated Condensed Statement of
Cash Flows, three months ended
September 30, 1995 and 1994. 7
Notes to Consolidated Condensed
Financial Statements. 9
Management's Discussion and Analysis
of Financial Condition and Results
of Operations. 10
Part II Other Information: 11
(2)
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PART I FINANCIAL INFORMATION
(3)
<PAGE>
THE METAL ARTS COMPANY, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
ASSETS
9/30/95 6/30/95
Current Assets:
Cash $ 133,338 $ 78,592
Trade accounts receivable - net 230,681 230,564
Current portion of due from NYSERDA 22,291 80,730
Due from former subsidiary - net 0 0
Current portion of deferred tax asset 7,100 7,100
Prepaid expenses and other current assets 10,379 9,693
------------ ----------
403,789 406,679
Property, Plant and Equipment 860,952 828,150
Less: Accumulated depreciation (305,439) (288,032)
------------ ----------
555,513 540,118
Other Assets:
Due from NYSERDA, net of current portion 11,447 8,970
Cash value of life insurance 7,893 7,893
Operating rights - net 19,430 19,430
Debt issuance costs - net 21,243 21,243
Deferred tax asset, net of current portion 180,700 180,700
Other assets 18,797 17,955
------------ ----------
259,510 256,191
------------ ----------
$ 1,218,812 $1,202,988
============ ==========
(4)
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THE METAL ARTS COMPANY, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
9/30/95 6/30/95
Current Liabilities:
Current portion of long-term debt $ 24,185 $ 26,262
Accounts payable - trade 154,969 135,359
Accrued expenses 3,274 9,528
Accrued payroll and related taxes 27,517 27,717
Accrued commissions 34,474 34,836
----------- ----------
244,419 233,836
Long-term Liabilities:
Long-term debt, net of current portion 378,907 384,958
Other long-term liability 243,222 243,222
Deferred tax liability 18,000 18,000
----------- ----------
640,129 646,180
Minority interest in subsidiary 135,234 125,002
Stockholders' equity:
Common stock - $.01 par value,
15,000,000 shares authorized; issued and
outstanding: 7,307,402 at September 30,
and June 30, 1995 73,074 73,074
Paid-in capital in excess of par value 2,358,188 2,358,188
Accumulated deficit (2,232,232) (2,233,292)
----------- ----------
199,030 197,970
----------- ----------
$ 1,218,812 $ 1,202,988
=========== ===========
(5)
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THE METAL ARTS COMPANY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
1995 1994
Net sales $ 418,726 $ 389,091
Cost of goods sold 342,779 322,547
---------- ----------
Gross profit 75,947 66,544
Selling, general and
administrative expenses 57,679 24,493
Research and development 1,684 0
---------- ----------
Operating income (loss) 16,584 42,051
Other income (expense) 0 (1,833)
Interest expense (5,417) (3,169)
Interest income 125 523
Minority interest in (income)
Loss of subsidiary (10,232) (12,600)
---------- ----------
(15,524) (17,079)
---------- ----------
Income (loss) from continuing operations 1,060 24,972
Income (loss) from discontinued operations 0 63,735
---------- ----------
Net income (loss) for the period $ 1,060 $ 88,707
========== ==========
Weighted average number
of common shares outstanding 7,307,402 7,288,270
========== ==========
Earnings per share of common stock:
Income (loss) from continuing operations $ .00 $ .00
Income (loss) from discontinued operations .00 .01
---------- ----------
Net income (loss) for the period $ .00 $ .00
========== ==========
(6)
<PAGE>
THE METAL ARTS COMPANY, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30,
1995 1994
Cash flows from operating activities;
Net income (loss) for the period $ 1,060 $ 88,707
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 17,407 15,040
Minority interest in income of subsidiary 10,232 12,600
(Income) loss from discontinued operations 0 (63,735)
Change in operating accounts:
Accounts receivable (120) 14,543
Prepaid expenses and other 54,437 (37,299)
Accounts payable 19,610 (27,461)
Accrued expenses (6,254) (526)
Accrued payroll and commissions (696) 1,442
--------- ---------
95,676 3,311
Cash flows from investing activities:
Advances to former subsidiary 0 (13,415)
Capital expenditures (32,802) (37,483)
--------- ---------
(32,802) (50,898)
Cash flows from financing activities:
Exercise of stock warrants 0 13,800
Sale of debentures 0 250,000
Payments on long-term debt (8,128) (9,067)
--------- ---------
(8,128) 254,733
--------- ---------
Net increase (decrease) in cash 54,746 207,146
Cash at beginning of period 78,592 13,349
--------- ---------
Cash at end of period $ 133,338 $ 220,495
========= =========
(7)
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Supplemental disclosures of cash flow information:
Three Months Ended
September 30,
1995 1994
Cash paid for interest expense $ 5,417 $ 3,169
========= =========
Supplemental schedule of non-cash financing activities:
Sale of debentures $ 0 $ 275,000
Payment of liabilities 0 (25,000)
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Cash received from sale of debentures $ 0 $ 250,000
========= =========
(8)
<PAGE>
THE METAL ARTS COMPANY, INC.
Notes to Consolidated Condensed Financial Statements
1. These statements should be read in conjunction with the audited
financial statements and the notes thereto and with Management's Discussion
and Analysis of Financial Condition and Results of Operations included in the
Company's Form 10-K for the fiscal year ended June 30, 1995. In the opinion
of management, the accompanying consolidated condensed financial statements
contain all adjustments of a normal recurring nature necessary for the fair
presentation of the Comapany's financial position as of September 30, 1995
and the results of operations for the three months ended September 30, 1995
and 1994.
2. The results of operations for the three months ended September 30, 1995
are not necessarily indicative of the results to be expected for the full
year.
3. Earnings (loss) per share of common stock is computed on the weighted
average number of shares outstanding during the three months ended September
30, 1995 and 1994. the weighted average number of shares outstanding at the
end of each period is determined by totaling the number of shares outstanding
at the end of each month in the period and dividing the sum by the number of
months in the period.
(9)
<PAGE>
THE METAL ARTS COMPANY, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operation
Liquidity and Capital Resources
Private Placement of Debentures
The company sold, as of September 30, 1994, eleven debentures for a
total of $275,000. The purpose of the private placement was to acquire the
technology for plating electroless nickel on aluminum, complete all research
and development, conduct test trials with potential customers leading up to
commercialization in the computer disk and aluminum wheel markets.
New York State Energy Research and Development Authority Funding
The company signed an agreement with the New York State Energy Research
and Development Authority (NYSERDA) dated June 22, 1995 for funding of
$325,000 for its new technology. This was done as a part of NYSERDA's
Industrial Waste Minimization Program. The purpose of the funding is to
provide money for the completion of research and development, test trials,
commercial demonstrations and commercialization of the technology.
During the quarter ended September 30, 1995 the company received a
first payment of $80,700 as a part of NYSERDA's funding program.
Operating Activities
Over the past three fiscal years Coating Technology has shown steady
growth in sales and earnings. Cash flow was adequate to provide for the
acquisition of capital equipment and provide the working capital necessary to
run the business. There was a significant increase in cash generated during
the fiscal year 1995 over 1994 and 1993 as well as the cash balance at the
end of the year. In addition, all relevant measures relating to: Debt to
Equity; current ratio; working capital; and net worth increased
substantially.
Through the first quarter of fiscal year 1996, Coating Technology
operated profitably with sufficient resources to sustain operations.
If Metal Arts is successful in commercializing its new technology it
will be necessary to raise additional capital. The amount of capital
required will depend on how rapidly market acceptance might occur. If this
does occur it could result in growth in the company's sales and earnings over
the next few years. The company will seek, if commercial sales commence, to
raise additional capital in the form of receivables financing, warrant
conversion or other investment mechanisms to sustain operations.
(10)
<PAGE>
The Metal Arts Company, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operation
B. RESULTS OF OPERATIONS:
The following table illustrates the major components of consolidated net
sales and net income (loss).
Three Months Ended
September 30,
1995 1994
Consolidated Net Sales:
Metal Arts 0 0
Coating Technology $419,000 $389,000
Discontinued Operations 0 530,500
-------- --------
$419,000 $919,500
Consolidated Net Income (Loss)
Metal Arts (33,000) (16,900)
Coating Technology 34,000 41,900
Discontinued Operations 0 63,700
-------- --------
$ 1,000 $ 88,700
-------- --------
The Metal Arts Company, Inc.
The net sales for the company for the three (3) months ended September 30,
1995 were -0- compared with -0- in the previous year. The company showed a
loss of $33,000 versus a loss of $16,900 the previous year.
Coating Technolgy, Inc.
Coating Technology's sales for the three (3) months ended September 30, 1995
were $419,000 as compared with $389,000 in the previous year. the company
showed a profit of $34,000 as compared with a profit of $41,900 in the
previous year.
(11)
<PAGE>
THE METAL ARTS COMPANY, INC.
Part II - Other Information:
Item 6 - Exhibits and Reports on Form 8-K
A. Exhibits - None
B. Reports on Form 8-K - None
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.
THE METAL ARTS COMPANY, INC.
Date: November 10, 1995 /s/ Stanley J. Dahle
----------------- --------------------
Stanley J. Dahle
President
Date: November 10, 1995 /s/ Albert A. Cauwels
----------------- ---------------------
Albert A. Cauwels
Treasurer
(12)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 133,000
<SECURITIES> 0
<RECEIVABLES> 253,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 404,000
<PP&E> 860,000
<DEPRECIATION> 305,000
<TOTAL-ASSETS> 1,219,000
<CURRENT-LIABILITIES> 244,000
<BONDS> 0
<COMMON> 73,000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,219,000
<SALES> 419,000
<TOTAL-REVENUES> 419,000
<CGS> 343,000
<TOTAL-COSTS> 402,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,000
<INCOME-PRETAX> 1,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
