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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended December 31, 1995
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[ ] 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 0-14068
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MEMRY CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 06-1084424
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
57 Commerce Drive, Brookfield, CT 06804
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(Address of principal executive offices) (Zip Code)
(203) 740-7311
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. As of December 31, 1995, 8,241,527
shares of the registrant's common stock, par value $.01 per share, were issued
and outstanding.
Transitional Small Business Disclosure Format (check one):
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Yes ____ NO X
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This amendment to the Quarterly Report on Form 10-QSB of Memry Corporation
(the "Company") for the fiscal quarter ended December 31, 1995 (the "Original
Form 10-QSB) amends and modifies the Original Form 10-QSB as follows:
Item 2 of Part I, Management's Discussion and Analysis or Plan of Operations,
is amended by the amendment of the section entitled "(A) LIQUIDITY AND CAPITAL
RESOURCES" and by the correction of non-substantive typographical errors in
"(B) RESULTS OF OPERATIONS."
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results.
(A) LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated financial statements have been presented on a going
concern basis which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has incurred net
losses of ($771,000) and ($933,000), and negative cash flow from operations of
($1,953,000) and ($1,232,000), for the six months ended December 31, 1995 and
1994, respectively. As a result, the Company has a stockholders' deficit of
($289,000) and its current liabilities exceeded its current assets by $1,514,000
as of December 31, 1995, as compared to a stockholders' deficit of $1,031,000
and an excess of current liabilities over current assets of $2,294,000 as of
December 31, 1994. The Company intends to solve its current approximately
$1,500,000 working capital deficit through up to approximately $1,100,000 of
additional equity sales to certain of the Company's larger stockholders, by
refinancing the current indebtedness of its subsidiary, Wright Machine
Corporation, to its bank (all of such amount (approximately $1,150,000) of which
is currently classified as short-term debt) within the next six months and by
continuing to delay the payment of certain accounts payable to professional
service providers (which accounts aggregate approximately $180,000). There can
be no assurances, however, that the Company will be able to consummate such
additional equity sales or Wright Machine Corporation's refinancing, or that the
Company will continue to be able to defer payments to creditors. Obviously, if
the Company is not able to solve its material working capital deficit, the
Company may be forced to curtail or cease operations.
The Company anticipates that it will continue to incur losses from operations
until the fourth quarter, at which time the Company expects to be cash flow
positive, for the following reasons. The Company plans to maintain stringent
control on expenses while increasing its revenues and improving gross profit
margins. The Company received a twenty-two month, $308,000 research and
development contract in February 1996 from McDonnell Douglas related to a smart
materials actuator for a helicopter rotor trim tab. The Company also announced
on January 30, 1996 that it will be the exclusive supplier to Nicklaus Golf
Equipment of components to be used in a new line of wedges and a putter named
the IQ Insert. In addition, the Company expects sales of its shape memory alloy
("SMA") wire to increase as a result of a new application development for the
medical wire business. With respect to the forward looking statements contained
in this paragraph, there can be no assurances that the Company will successfully
increase revenues sufficiently to become cash flow positive by the fourth
quarter. Among other factors that could cause the Company to fail to achieve
positive cash flow are the failure of a
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market for the Company's products to develop as anticipated or adverse
consequences arising from the Company's current working capital deficit.
(B) RESULTS OF OPERATIONS
Six months ended December 31, 1995 compared to six months ended December 31,
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1994.
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Overall revenues decreased to $2,181,000 in the first half of fiscal 1996 from
$2,421,000 during the same period in fiscal 1995, a decrease of $240,000, or
10%. Revenues relating to the Memry Segment decreased to $575,000 during the
six months ending December 31, 1995 from $610,000 during the same fiscal 1995
period, a decrease of $35,000, or 6%. Memry Segment product sales, exclusive of
research and development contract revenues, decreased $79,000 to $298,000 for
the six months ended December 31, 1995 as compared with $377,000 during the same
period of fiscal 1995, a decrease of 21%. This is largely attributable to the
reduction in MEMRYSAFE (R) product sales to the Australian market. Research and
development revenues increased $44,000, or 19%, during the six months ended
December 31, 1995 to $277,000 from $233,000 billed during the six months ended
December 31, 1994. The increase of research and development revenues is the
result of Wright Machine Segment's increased billings for the work of
subcontractors. Wright Machine Segment sales decreased to $1,606,000 during the
first six months of fiscal 1996 from $1,811,000 during the same period in fiscal
1995, a decrease of $205,000, or 11%. This reduction is the result of raw
material suppliers increasing prices and requiring payment in advance, resulting
in liquidity constraints.
Manufacturing costs decreased to $1,578,000 in the six months ended December 31,
1995 from $1,906,000 in the period ending December 31, 1994, a decrease of
$328,000, or 17%. The overall gross profit margin was 17% in the first six
months of fiscal 1996, as compared to 16% in the first six months of fiscal
1995. Memry Segment manufacturing costs were $281,000 at December 31, 1995
compared to $279,000 at December 31, 1994, an increase of $2,000, with gross
profit margins of 6% and 26%, respectively. The decrease in the Memry Segment
margin is attributable to the decrease in sales and the increase in re-
engineering costs of the MEMRYSAFE (R) products. Research and development costs
were $235,000 in the first six months of fiscal 1996 compared to $127,000 during
the same period in fiscal 1995. This increase of $108,000, or 85%, was due to
the increase in the research and development contract revenue and additional
development work by outside subcontractors related to the government contracts.
Wright Machine Segment's manufacturing costs for the first six months of fiscal
1996 were $1,297,000 as compared with $1,626,000 during the same period in
fiscal 1995, a decrease of $329,000, or 20%. The reduction is directly
attributable to the reduced sales.
General, Selling and Administrative Expenses ("GS&A") decreased $23,000, or 2%,
to $981,000 during the period ended December 31, 1995 from
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$1,004,000 during the same period in fiscal 1995. This is the result of a
decrease in the auditing fees and a reduction of administrative employees at the
Wright Segment.
Depreciation and amortization expense was $48,000 in the first six months of
fiscal 1996, as compared with $140,000 during the same period in fiscal 1995.
The $92,000, or 66% decrease is primarily a result of assets at the Wright
Machine Segment becoming fully depreciated. There was virtually no change at
the Memry Segment.
Interest expense decreased in the first six months of fiscal 1996 to $110,000
from $177,000 in the six months ending December 31, 1994. This $67,000, or 38%
decrease is primarily due to a paydown of the Wright Machine Segments mortgage
with its bank.
Net loss for the first six months of fiscal 1996 was ($771,000) as compared to
($933,000) for the same period in fiscal 1995, an improvement of $162,000, or
17%. The $41,000, or 6%, increase in the Memry Segment net loss to ($754,000)
for the six months ended December 31, 1995 from ($713,000) for the six months
ended December 31, 1994, was offset by the $203,000, or 92% improvement in the
Wright Machine Segment loss, to ($17,000) for the six months ended December 31,
1995 from ($220,000) for the six months ended December 31, 1994. The Memry
Segment increase in net loss is attributable to lower sales. However, the
Wright Segment improvement is due to lower GS&A and reduced depreciation
expense.
Three months ended December 31, 1995 compared to three months ended December 31,
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1994.
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Overall revenues decreased to $1,000,000 in the three months ended December 31,
1995, from $1,080,000 during the same period in fiscal 1995, a decrease of
$80,000, or 7%. Revenues relating to the Memry Segment increased to $270,000
during the three month period ended December 31, 1995 from $208,000 during the
same period in fiscal 1995, an increase of $62,000, or 30%. Product sales,
exclusive of research and development revenues, increased $66,000 to $166,000
for the three months ended December 31, 1995 as compared with $100,000 during
the same period of fiscal 1995, an increase of 66%. This increase is largely
attributable to an increase in sales of the SMA wire and the golf club inserts.
Research and development revenues decreased $4,000 during the quarter ended
December 31, 1995 to $104,000 from $107,000 during the quarter ending December
31, 1994. Wright Machine Segment sales decreased to $730,000 during the first
three months of fiscal 1996 from $872,000 during the same period in fiscal 1995,
a decrease of $142,000, or 16%. This reduction is the result of raw material
suppliers increasing prices and requiring payment in advance, resulting in
liquidity constraints.
Manufacturing costs decreased to $680,000 in the three months ended December 31,
1995 from $873,000 in the quarter ending December 31, 1994, a decrease of
$193,000, or 22%. The overall gross profit margin was 22%
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in the three months ended December 31, 1995, as compared to 15% in the quarter
ending December 31, 1994. Memry Segment manufacturing costs were $153,000 at
December 31, 1995 compared to $100,000 at December 31, 1994, an increase of
$53,000, or 53%, with margins of 8% and 0%, respectively. The increase in
margin is attributable to the increase in sales. Wright Machine Segment's
manufacturing costs for the three months of fiscal 1996 were $526,000 as
compared with $773,000 during the same period in fiscal 1995, a decrease of
$247,000, or 32%. The reduction is directly attributable to the reduced sales.
Research and development costs were $98,000 in the three months ended December
31, 1995 compared to $46,000 during the same quarter in fiscal 1995. This
increase of $52,000, or 113%, was due to the increase in the research and
development contract revenue and additional development work by outside
subcontractors relating to the government contractors.
General, Selling and Administrative Expenses ("GS&A") increased $35,000, or 7%,
to $539,000 during the quarter ended December 31, 1995 from $504,000 during the
same period in fiscal 1995. The increase is largely related to the addition of
the Chief Operating Officer at the Memry Segment, partially offset by decreased
auditing fees and a reduction of administrative employees at the Wright Segment.
Depreciation and amortization expense was $24,000 in the three months ended
December 31, 1995, as compared with $97,000 during the same period in fiscal
1995. The $73,000, or 75% decrease is primarily a result of assets at the
Wright Segment becoming fully depreciated.
Interest expense decreased to $55,000 in the quarter ending December 31, 1995
from $111,000 in the quarter ending December 31, 1994. This $56,000, or 50%,
decrease is primarily due to a paydown of the Wright Machine Segments mortgage
with its bank.
Net loss for the second quarter in fiscal 1996 was ($396,000) as compared to
($551,000) for the same quarter in fiscal 1995, an improvement of $155,000, or
28%. This was due to the $2,000 improvement in the Memry Segment net loss to
($428,000) for the three months ended December 31, 1995 from ($430,000) for the
three months ended December 31, 1994, along with the $152,000, or 127%
improvement in the Wright Machine Segment loss, to a $32,000 net profit for the
three months ended December 31, 1995 from ($120,000) net loss for the three
months ended December 31, 1994. The Memry Segment reduction is attributable to
lower sales. However, the Wright Segment improvement is due to lower GS&A and
reduced depreciation expense.
In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 112 "Accounting for Postemployment Benefits,"
which was required to be implemented by the Company in fiscal 1995. Because the
Company generally does not provide such benefits, the adoption of this statement
was not material to the Company's financial results for the second quarter of
fiscal 1996.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MEMRY CORPORATION
Date: February 22, 1996 By: /s/ James G. Binch
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James G. Binch
President, CEO, Treasurer and Chairman
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