<PAGE>
SECURITIES AND EXCHANAGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997
Commission File No. 0-4671
ISOMET CORPORATION
State of Incorporation - New Jersey
IRS Employer Identification No. 22-1591074
Address of Principal Executive Offices
5263 Port Royal Road
Springfield, Virginia 22151
Registrant's Telephone Number: (703) 321-8301
Common Shares Outstanding on September 30, 1997: 1,909,090
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 preceeding 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 ninety (90) days.
[X] Yes [_] No
<PAGE>
ISOMET CORPORATION
Part 1: Financial Information
-----------------------------
Item 2: Financial Statements
----------------------------
A. Statement of Income (1)(2)(3)(000 omitted)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
---------- ----------- ------------ -----------------
<S> <C> <C> <C> <C>
1. Revenues
a. Sales $ 1,859 $ 1,167 $ 5,962 $ 3,910
b. Interest Income 1 1 3 3
c. Other Income 4 - 5 -
---------- ---------- ---------- ----------
$ 1,864 $ 1,168 $ 5,970 $ 3,913
---------- ---------- ---------- ----------
2. Cost and Expenses
a. Cost of Sales $ 1,215 $ 870 $ 3,893 $ 2,765
b. Selling, General & Admin 294 304 947 961
c. Research & Development - - - 8
d. Interest Expense 29 38 91 117
---------- ---------- ---------- ----------
Total Cost and Expenses $ 1,538 $ 1,212 $ 4,931 $ 3,851
---------- ---------- ---------- ----------
3. Income (Loss) Before Taxes
on Income $ 326 $ (44) $ 1,039 $ 62
4. Provisions for Taxes on Income 127 1 405 2
---------- ---------- ---------- ----------
5. Net Income (Loss) $ 199 $ (45) $ 634 $ 60
---------- ---------- ---------- ----------
Net Income (Loss) Per Share $ .10 $ (.02) $ .32 $ .03
---------- ---------- ---------- ----------
6. Number of Shares of Common
Stock & Equiv. Outstanding 1,972,900 1,905,600 1,972,900 1,905,600
7. Dividends Per Share - - - -
</TABLE>
(1) This Financial Statement is unaudited.
(2) The results for interim periods are not necessarily indicative of
results to be expected for the year due to:
a. Fluctuations in order receipt and customer delivery.
b. Fluctuations in yield in manufacturing processes may
cause fluctuations in operating results for interim periods.
(3) In the opinion of management, all adjustments have been made which
are necessary to reflect a fair statement of the results for the
three and nine months ended September 30, 1997 and September 30, 1996.
All such adjustments are of a normal and recurring nature.
<PAGE>
ISOMET CORPORATION
Financial Statements
B. Balance Sheet (1)(000 omitted)
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
-------------------- ------------
<S> <C> <C>
Current Assets
Cash and Equivalent $ 991 $ 201
Accounts Receivable, Net 890 1,517
Other Current Assets 456 385
Inventories (2) 3,669 3,730
-------- --------
$ 6,006 $ 5,833
-------- --------
Property and Equipment at Cost $ 2,556 $ 2,561
Less Accumulated Depreciation (2,281) (2,245)
-------- --------
$ 275 $ 316
-------- --------
Other Assets $ 52 $ 52
-------- --------
$ 6,333 $ 6,201
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable $ 335 $ 678
Accrued Liabilities 623 280
Notes Payable to Banks 1,024 324
Notes Payable to Others - -
Deposits 33 456
-------- --------
$ 2,015 $ 1,738
-------- --------
Long Term Liabilities $ 11 $ 876
-------- --------
Minority Interest in Colsolidated
Subsidiary $ - $ -
-------- --------
Stockholders' Equity (Deficit (3))
Common Stock Par Value $1 Per
Share: Authorized 2,500,000
Shares; Issued and Outstanding: $ 1,909 $ 1,906
Capital Contributed in Excess
of Par Value 4,223 4,221
Unamortized Deferred Compensation (29) (65)
Accumulated Deficit (1,867) (2,501)
Foreign Exchange Adjustment 71 26
-------- --------
$ 4,307 $ 3,587
-------- --------
$ 6,333 $ 6,201
-------- --------
(1) Unaudited. Subject to Year-End
Adjustments
(2) Inventory Breakdown
Parts and Raw Material $ 1,500 $ 1,175
Work in Process 1,626 2,083
Finished Goods 543 472
-------- --------
$ 3,669 $ 3,730
-------- --------
(3) The number of shares of common
stock reserved for issuance upon
the exercise of options granted
or to be granted. 244,000 254,500
</TABLE>
<PAGE>
ISOMET CORPORATION
Financial Statements
C. Statement of Cash Flows
Nine Months Ended September 30
<TABLE>
<CAPTION>
(000 omitted)
1997 1996
----- -----
<S> <C> <C>
Cash Flow From Operating Activities
Net Income (Loss) $ 634 $ 60
Adjustment to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities
Depreciation and Amortization $ 36 $ 67
Amortization of Deferred Compensation 36 28
Changes in Assets & Liabilities:
(Increase) Decrease in Accts Receivable 627 7
(Increase) Decrease in Other Current Assets (71) (4)
(Increase) Decrease in Inventories 61 (390)
Increase (Decrease) in Accts Payable (343) 194
Increase (Decrease) in Accrued Liabilities 343 153
Increase (Decrease) in Deposits (423) 6
----- -----
Total Adjustments: $ 266 $ 61
----- -----
Net Cash Provided (Used) by Oper Activities $ 900 $ 121
----- -----
Cash Flows from Investing Activities:
Purchase of Property and Equipment $ 5 $ (11)
Proceeds from Sale of Property and Equip - -
----- -----
Net Cash (Used) by Investing Activities $ 5 $ (11)
----- -----
Cash Flows from Financing Activities:
Exercise of Stock Option $ 5 $ -
Proceeds of Long-Term Debt/Notes Payable 16 61
Principal Payments Under Long Term Debt
and Notes Payable (181) (218)
----- -----
Net Cash Provided (Used) by Financing
Activities $(160) $(157)
----- -----
Effect of Exchange Rate on Changes in Cash $ 45 $ (28)
----- -----
Net Increase (Decrease) in Cash $ 790 $ (75)
----- -----
Cash at Beginning of Year $ 201 $ 86
----- -----
Cash at September 30 $ 991 $ 11
----- -----
Supplemental Disclosures of Cash Flow Info
Cash Paid During the Year for:
Interest $ 91 $ 117
----- -----
Income Taxes $ 4 $ -
----- -----
</TABLE>
<PAGE>
ISOMET CORPORATION
------------------
ITEM 2: MANAGEMENT'S ANALYSIS OF QUARTERLY INCOME STATEMENTS
-------------------------------------------------------------
Revenue for the third quarter of 1997 totaled $1,864,000, an increase of
approximately $700,000 over the level in the same 1996 period. The increase is
due to increased deliveries of laser plotters and other system products totaling
approximately $640,000, as well as higher component shipments of about $60,000.
For the nine months ending September 30, 1997, revenue of $5,970,000 is a
$2,057,0000 increase over the same period of 1996. Laser plotter and other
system product shipments account for most of this nine month 53% increase.
For the current year third quarter net earnings totaled $199,000 or $.10
per share (vs.) a net loss of $(45,000) or $(.02) per share last year. Net
earnings for the nine months ended September 30, 1997 of $634,000 or $.32 per
share exceeded last years results of $60,000 or $.03 per share. Major factors in
the current year net earnings improvement are as follows:
<TABLE>
<CAPTION>
<S> <C>
Increased Gross Profit: $ 924,000
Decreased Period Costs: 48,000
Increased Income Tax and Other: (398,000)
---------
Net Income Increase: $ 574,000
</TABLE>
New orders totaled $2,850,000 for the quarter and $5,795,000 for the
current nine month period, compared to $987,000 and $3,423,000 respectively,
last year. Unfilled orders on September 30, 1997 totaled $4,260,000, compared to
$5,333,000 on the same date last year and $4,549,000 on December 31, 1996.
Effective April 1, 1997, the Company's loan agreement with NationsBank was
renewed through April 1, 1998, with a fixed principal repayment schedule of
$20,000 per month. During the period from October 1, 1997 - September 30, 1998,
the Company expects to generate sufficent cash flow from operations to meet its
liquidity needs and to renew its existing loan agreement in April, 1998.
As of September 30, 1997, the Company has no material commitments for
capital expenditures and accordingly, no funds from sources other than
internally generated funds are considered necessary over the next twelve (12)
months.
<PAGE>
ISOMET CORPORATION
------------------
Part II: Other Information
1. Legal Proceedings
None
2. Change in Securities
None
3. Defaults Upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8K
a. Exhibits - 27 - Financial Data Schedule for quarter
ended September 30, 1997.
b. No reports on Form 8K have been filed by the Registrant
during the quarter ended September 30, 1997.
<PAGE>
ISOMET CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned thereunto duly authorized.
ISOMET CORPORATION
------------------------
Registrant
By: /s/ Jerry W. Rayburn
---------------------
Jerry W. Rayburn
Executive Vice President
Finance and Treasurer
Date: 11/12/97
----------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS 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> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 991
<SECURITIES> 0
<RECEIVABLES> 890
<ALLOWANCES> 0
<INVENTORY> 3,669
<CURRENT-ASSETS> 6,006
<PP&E> 2,556
<DEPRECIATION> 2,281
<TOTAL-ASSETS> 6,333
<CURRENT-LIABILITIES> 2,015
<BONDS> 0
0
0
<COMMON> 1,909
<OTHER-SE> 2,398
<TOTAL-LIABILITY-AND-EQUITY> 6,333
<SALES> 1,859
<TOTAL-REVENUES> 1,864
<CGS> 1,215
<TOTAL-COSTS> 1,538
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29
<INCOME-PRETAX> 326
<INCOME-TAX> 127
<INCOME-CONTINUING> 199
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
