<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
_____________________
For the quarterly period ended March 31, 2000
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934
For the transition period from to
_____________________
Commission File Number 0-14068
_____________________
Memry Corporation
_____________________
(Exact name of small business issuer as specified in its charter)
Delaware 06-1084424
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
57 Commerce Drive, Brookfield, Connecticut 06804
(Address of principal executive offices)
(203) 740-7311
(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
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date. As of May 4, 2000, 21,129,203 shares
of the registrant's common stock, par value $.01 per share, were issued and
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes
No X
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited):
Consolidated Balance Sheets as of March 31, 2000 and June 30, 1999
Consolidated Statements of Operations for the three and nine months ended March
31, 2000 and 1999
Consolidated Statements of Comprehensive Income for the three and nine months
ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows for the nine months ended March 31, 2000
and 1999
Notes to the Consolidated Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
PART II OTHER INFORMATION
ITEM 2. Changes in Securities
ITEM 6. Exhibits and Reports on Form 8K
2
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Memry Corporation & Subsidiaries
Consolidated Balance Sheets
(Unaudited)
March 31, June 30,
2000 1999
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents $ 683,000 $ 1,191,000
Accounts receivable, less allowance for doubtful
accounts 4,834,000 2,238,000
Inventories (Note B) 2,773,000 3,182,000
Prepaid expenses and other current assets 44,000 21,000
Income tax receivable 89,000 89,000
------------ ------------
Total current assets 8,423,000 6,721,000
------------ ------------
Property, Plant, and Equipment 9,664,000 8,007,000
Less accumulated depreciation (3,462,000) (2,691,000)
------------ ------------
6,202,000 5,316,000
------------ ------------
Other Assets
Patents and patent rights, less accumulated
Amortization 1,502,000 1,605,000
Goodwill, less accumulated
Amortization 3,928,000 4,465,000
Deferred financing costs, less accumulated
Amortization 18,000 29,000
Deposits 46,000 46,000
------------ ------------
5,494,000 6,145,000
------------ ------------
Total assets $ 20,119,000 $ 18,182,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,307,000 $ 889,000
Accrued expenses 1,849,000 1,773,000
Notes payable 4,049,000 2,571,000
Current maturities of capital lease obligations 26,000 39,000
Acquisition liability - 1,046,000
------------ ------------
Total current liabilities 7,231,000 6,318,000
Capital lease obligations, less current maturities 29,000 36,000
Notes Payable, less current maturities 1,580,000 862,000
------------ ------------
Total Liabilities 8,840,000 7,216,000
------------ ------------
Stockholders' Equity
Common stock 211,000 208,000
Additional paid-in capital 44,349,000 43,832,000
Accumulated deficit (32,269,000) (32,544,000)
Accumulated other comprehensive loss:
Foreign currency translation adjustment (1,012,000) (530,000)
------------ ------------
Total stockholders' equity 11,279,000 10,966,000
------------ ------------
Total liabilities and stockholders' equity $ 20,119,000 $ 18,182,000
============ ============
3
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Memry Corporation & Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
Revenues
Product Sales $6,924,000 $4,252,000
Research and development 313,000 97,000
---------- ----------
7,237,000 4,349,000
Cost of revenues
Manufacturing 4,115,000 1,995,000
Research and development 122,000 73,000
---------- ----------
4,237,000 2,068,000
Gross profit 3,000,000 2,281,000
Operating expenses
General, selling and administration 2,162,000 1,815,000
Depreciation and amortization 198,000 257,000
---------- ----------
2,360,000 2,072,000
---------- ----------
Operating income 640,000 209,000
---------- ----------
Other income (expense)
Interest expense (112,000) (39,000)
Interest income 8,000 -
Other income 107,000 15,000
(Loss) gain on disposition of assets 9,000
---------- ----------
3,000 (15,000)
Income before income taxes 643,000 194,000
Provision for income taxes 40,000 97,000
---------- ----------
Net Income 603,000 $ 97,000
========== ==========
Basic Earnings Per Share: $ 0.03 $ 0.00
========== ==========
Diluted Earnings Per Share: $ 0.03 $ 0.00
========== ==========
4
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Memry Corporation & Subsidiaries
Consolidated Statements of Operations
For the Nine Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
-------- --------
Revenues
Product Sales $17,465,000 $13,305,000
Research and development 796,000 621,000
----------- -----------
18,261,000 13,926,000
Cost of revenues
Manufacturing 11,008,000 6,983,000
Research and development 395,000 388,000
----------- -----------
11,403,000 7,371,000
Gross profit 6,858,000 6,555,000
Operating expenses
General, selling and administration 5,885,000 4,792,000
Depreciation and amortization 440,000 406,000
----------- -----------
6,325,000 5,198,000
Operating income 533,000 1,357,000
Other income (expense)
Interest expense (267,000) (24,000)
Interest income 17,000 -
Other income (expense) 52,000 32,000
(Loss) gain on disposition of assets (6,000) 9,000
----------- -----------
(204,000) 17,000
Income before income taxes 329,000 1,374,000
Provision for income taxes 54,000 316,000
----------- -----------
Net income $ 275,000 $ 1,058,000
=========== ===========
Basic Earnings Per Share: $ 0.01 $ 0.05
=========== ===========
Diluted Earnings Per Share $ 0.01 $ 0.05
=========== ===========
5
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Memry Corporation & Subsidiaries
Consolidated Statements of Comprehensive Income
For the Three Months and Nine Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
03/31/2000 03/31/1999 03/31/2000 03/31/1999
============ ============ =========== ===========
<S> <C> <C> <C> <C>
Net Income $ 603,000 $ 97,000 $ 275,000 $ 1,058,000
Other Comprehensive Income (Loss)
Foreign Currency Translation
Adjustments, net of tax (294,000) (352,000) (482,000) (420,000)
------------ ------------ ----------- -----------
Comprehensive Income (Loss) $ 309,000 $ (255,000) $ (207,000) $ 638,000
============ ============ =========== ===========
</TABLE>
6
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Memry Corporation & Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
Cash Flows From Operating Activities:
<S> <C> <C>
Net Income $ 275,000 $ 1,058,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,274,000 830,000
Loss (gain) on disposal of assets 6,000 (9,000)
Warrants issued for partial settlement of liability 39,000 -
Compensation paid by issuance of common stock 120,000 -
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable (2,614,000) 699,000
Decrease in notes receivable - 541,000
Decrease (Increase) in inventories 384,000 (1,739,000)
Decrease (increase) in prepaid expenses and other assets 18,000 (225,000)
Increase (decrease) in accounts payable and accrued expenses 473,000 (187,000)
----------- -----------
Net cash provided by (used in) operating activities (25,000) 968,000
Cash Flows From Investing Activities:
Purchases of property, plant and equipment (1,919,000) (2,679,000)
Proceeds from sales of property, plant and equipment - 309,000
Deposits - (34,000)
----------- -----------
Net cash used in investing activities (1,919,000) (2,404,000)
Cash Flows From Financing Activities
Proceeds from issuance of common stock, net 28,000 267,000
Net increase in revolving loans payable 859,000 1,698,000
Proceeds from (repayment of) notes payable 923,000 (722,000)
Payments on acquisition obligations (258,000) -
Principal payments on capital lease obligations (19,000) (16,000)
----------- -----------
Net cash provided by financing activities 1,533,000 1,227,000
----------- -----------
Effect of foreign currency exchange rate changes on cash and cash equivalents (97,000) 15,000
(Decrease) in cash and cash equivalents (508,000) (194,000)
Cash and cash equivalents, beginning of year 1,191,000 1,189,000
----------- -----------
Cash and cash equivalents, end of period $ 683,000 $ 995,000
=========== ===========
</TABLE>
Supplemental Schedule of Noncash Investing and Financing Activities
7
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Conversion portion of acquisition liability to debt 456,000
Conversion portion of acquisition liability to common stock 333,000
-------
Total conversion portion of acquisition liability 789,000
=======
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MEMRY CORPORATION & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended March 31, 2000, are not
necessarily indicative of the results that may be expected for the year ending
June 30, 2000 ("fiscal 2000"). For further information, refer to the
consolidated financial statements and footnotes thereto included in the Annual
Report on Form 10-KSB for the year ended June 30, 1999 ("fiscal 1999") of Memry
Corporation (the "Company").
Note B. INVENTORIES
Inventories at March 31, 2000 and June 30, 1999, are summarized as follows:
March 31 June 30
-------- -------
Raw Materials $ 970,000 $ 690,000
Work-in-process 1,376,000 1,789,000
Finished goods 1,098,000 1,304,000
Allowance for slow-moving
and obsolete inventory (671,000) (601,000)
---------- ----------
2,773,000 3,182,000
========== ==========
Note C. EARNINGS PER SHARE
Basic earnings per share amounts are computed by dividing net income by the
weighted-average number of common shares outstanding. Diluted per share amounts
assume exercise of all potential common stock instruments unless the effect is
to reduce the loss or increase the income per common share.
For the periods presented, there were no items which changed net income as
presented in the consolidated statements of operations and the amounts used to
compute basic and diluted earnings per share.
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
3/31/2000 3/31/1999 3/31/2000 3/31/1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Number of Basic Shares Outstanding 21,110,400 20,691,961 20,951,984 20,313,298
Effect of Dilutive Securities:
Warrants 799,109 727,345 608,211 922,792
Options 522,606 263,787 536,017 421,962
---------- ---------- ---------- ----------
Number of Fully Diluted Shares
Outstanding 22,432,115 21,683,093 22,096,212 21,658,052
========== ========== ========== ==========
</TABLE>
9
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Note D. OPERATING SEGMENTS
The Company is engaged principally in one line of business, the development,
manufacturing and marketing of products utilizing the properties exhibited by
shape memory alloys, which represents more than 95% of consolidated revenues.
The following table presents information about the Company by geographic area.
There were no material amounts of sales or transfers among geographic areas and
no material amounts of United States export sales.
<TABLE>
<CAPTION>
Nine Months
Ended
3/31/2000
- ---------
United States Europe Consolidated
------------- ------ ------------
<S> <C> <C> <C>
Total revenues $17,150,000 $1,111,000 $18,261,000
Operating income (loss) 1,438,000 (905,000) 533,000
Identifiable assets 15,051,000 5,068,000 20,119,000
Nine Months
Ended
3/31/1999
- ---------
United States Europe Consolidated
------------- ------ ------------
Total revenues $13,309,000 $ 537,000 $13,846,000
Operating income (loss) 1,812,000 (455,000) 1,357,000
Identifiable assets 14,060,000 6,321,000 20,381,000
</TABLE>
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results. Certain statements under this caption may constitute "forward-looking
statements". See Part II - "Other Information".
(a) RESULTS OF OPERATIONS
Nine Months Ended March 31, 2000, compared to nine months ended March 31, 1999.
Revenues. Revenues increased 31% to $18,261,000 for the first nine months of
fiscal year 2000 from $13,926,000 during the same period in fiscal 1999, an
increase of $4,335,000. Sales of domestic medical device components and
assemblies increased approximately $3,500,000, domestic wire product sales
increased approximately $1,000,000 and revenues of Memry Europe, which was
purchased in October of 1998, contributed approximately $500,000 of the
increase. These increases were offset in part by a decrease in tube sales.
Costs and Expenses. Manufacturing costs (including costs associated with
research and development revenues) increased to $11,403,000 for the nine months
ended March 31, 2000 from $7,371,000 during the same nine month period in fiscal
1999. This increase of $4,032,000 or 55% was attributable to the 31% increase in
revenues and higher costs associated with maintaining and improving Memry's west
coast operation. Correspondingly, the Company's gross margin from sales
decreased to 38% for the nine months ended March 31, 2000, from 47% in the
comparable period in fiscal 1999.
General, selling and administrative expenses (including depreciation and
amortization) increased $1,127,000, or 22%, to $6,325,000 for the nine months
ended March 31, 2000, as compared to $5,198,000 during the same period of fiscal
1999. This increase is primarily attributable to the 31% increase in sales.
Other Income (expense) during the period decreased from $17,000 to ($204,000)
during fiscal 2000, due primarily to an increase in interest expense
attributable to a higher level of borrowing. The Company recorded a provision
for income taxes of $54,000 for the first nine months of fiscal 2000 relative to
a provision for income tax of $316,000 for the first nine months of fiscal 1999.
Such provision reflects an effective tax rate less than the statutory rate due
principally to the benefits arising from net operating loss carryforwards
available to the Company.
Net Income. Primarily due to the decrease in gross margin and the increase in
Interest Expense, the Company's net income decreased by $783,000, to $275,000,
in the first nine months of fiscal 2000 compared to net income of $1,058,000 for
the first nine months of fiscal 1999.
Three Months Ended March 31, 2000 compared to three months ended March 31, 1999
Revenues. Revenues increased 66%, to $7,237,000, for the third quarter of fiscal
year 2000 from $4,349,000 during the same period in fiscal 1999, an increase of
$2,888,000. Increased sales of components and assemblies to medical device
customers accounted for approximately $2,000,000 of this increase and increases
in wire product and tube sales represent the majority of the balance of the
increase in revenues.
Costs and Expenses. Manufacturing costs (including costs associated with
research and development revenues) increased to $4,237,000 for the three months
ended March 31, 2000, from $2,068,000 during the same three month period in
fiscal 1999. This increase of $2,169,000, or 105%, was attributable primarily to
a 66% increase in revenues and increased levels of staffing and training expense
related to the ramp-up of new products. Correspondingly, the Company's gross
margin from sales decreased for the three months ended March 31, 2000, from a
52% margin in the comparable period in fiscal 1999 to 41% in fiscal 2000.
General, selling and administrative expenses (including depreciation and
amortization) increased 14% to $2,360,000 for the three months ended March 31,
2000, as compared to $2,072,000 during the same period of fiscal 1999. This
increase is primarily attributable to the 66% increase in sales. Other income
(expense) during the period increased from ($15,000) in fiscal 1999 to $3,000
for the three months ended March 31, 2000, due primarily to foreign currency
exchange gains. The Company recorded a provision for income taxes of $40,000 for
the third quarter of fiscal 2000 compared to a tax provision of $97,000 for the
third quarter of fiscal 1999. Such provision reflects an effective tax rate less
than the statutory rate due principally to the benefits arising from net
operating loss carryforwards available to the Company.
Net Income. Due primarily to the increase in sales and effective management of
general, selling and administrative expenses, which
11
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offset the increase in manufacturing costs, the Company's net income increased
by $506,000 to $603,000 for the three month period ended March 31, 2000 as
compared to $97,000 for the same period in fiscal 1999.
(b) LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company's cash and cash equivalents balance was $683,000,
a decrease of $508,000 from $1,191,000 at the start of fiscal 2000. Cash used by
operations was $25,000 for the nine months ended March 31, 2000. Cash used in
investing activities was $1,919,000, representing funds invested in property,
plant and equipment. During the nine months ended March 31, 2000, cash provided
by financing activities, consisting primarily of increased bank borrowings,
totaled $1,533,000. Working capital at March 31, 2000 was $1,192,000, up from
$403,000 at June 30, 1999.
Under the terms of the transaction whereby the Company purchased Memry Europe,
the Company was obligated to pay an additional $1,046,000 in cash to the
shareholders of Memry Europe on October 30, 1999. On September 16, 1999, the
Company signed an agreement to convert approximately $456,000 of the obligation
to a term loan which matures on June 30, 2000. On October 29, 1999, the Company
paid approximately $258,000 to other former shareholders of Memry Europe. On
December 17, 1999, the Company signed an agreement with the holder of
approximately $333,000 of such obligation to convert the obligation to a
combination of common stock and warrants.
On June 30, 1998, the Company and Webster Bank entered into a Commercial
Revolving Loan, Term Loan, Line of Credit and Security Agreement and related
financing documents and agreements (the "Webster Facility"). Upon entering into
the Webster Facility, the Company paid off all amounts outstanding under its
prior credit facility with First Union National Bank. The Webster Facility
(prior to the amendment described below) included a revolving loan, an equipment
loan line of credit and a $500,000 term loan. The term loan is to be repaid in
equal monthly installments of principal over its five-year term. The revolving
loan provided for borrowings up to the lesser of (a) $3,000,000 or (b) an amount
equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the
lesser of $1,000,000 or 35% of eligible inventory. The revolving loan requires
the payment of a commitment fee equal to .25% per annum of the daily-unused
portion of the revolving loan. The equipment loan line of credit provides for
equipment financing up to the lesser of $750,000 or 75% of the purchase price
for eligible equipment each year through June 30, 2001. On June 30, 1999, the
Company converted $668,000 from the equipment line of credit into a term loan.
The Company has the remaining option of converting amounts borrowed under the
equipment line of credit to term loans on July 1, 2000 and 2001.
On November 30, 1999, the Company and Webster Bank reached agreement on an
amendment to the Webster Facility. Under the terms of the agreement, the
revolving loan now provides for borrowings up to the lesser of (a) $5,000,000 or
(b) an amount equal to the aggregate of (1) 80% of eligible accounts receivable
and (2) the lesser of $1,000,000 or 35% of eligible inventory. The equipment
loan is amended to provide for equipment financing up to the lesser of
$1,250,000 or 75% of the purchase price for eligible equipment each year through
June 30, 2001. A new term loan in the amount of $1,000,000 was provided with
the requirement that not less than $500,000 of the term loan will be used to
finance new machinery and equipment purchases. The other major provisions of
the agreement remain unchanged. At March 31, 2000, an aggregate amount of
approximately $5,312,000 was outstanding under the Webster Facility. The Webster
Facility is secured by substantially all of the Company's domestic assets.
Interest on the revolving loan and equipment line of credit is variable based on
either LIBOR or the Prime Rate as published in the Wall Street Journal, as
elected by the Company. Interest on the term loan and converted equipment loans
is either fixed, at a rate based on the U.S. Treasury yield, or variable based
on the Prime Rate, as elected by the Company. The Company has the ability to
convert between the different rates from time to time subject to certain
conditions.
In addition, the credit facility contains various restrictive covenants,
including, among others, limitations on encumbrances and additional debt,
prohibition on the payment of dividends or redemption of stock (except in
connection with certain existing put rights) restrictions on
management/ownership changes and required compliance with specified financial
ratios. As of March 31, 2000, the Company was in breach of certain of these
covenants related to financials conditions and ratios, but the Company has since
received a waiver or covenant modification for such financial covenants from
Webster Bank.
Memry Europe has a primary banking relationship with KBC Bank and Insurance
Group of Belgium. As of March 31, 2000, an aggregate of approximately $320,000
was outstanding with KBC in short-term and long-term debt.
The Company has in the past grown through acquisitions (including the
acquisition of Wire Solutions, Memry Europe and Raychem Corporation's nickel
titanium product line). As part of its continuing growth strategy, the Company
expects to continue to evaluate and pursue opportunities to acquire other
companies, assets and product lines that either complement or expand the
Company's existing
12
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businesses. The Company intends to use available cash from operations and
authorized but unissued common stock to finance any such acquisitions. The
Company does not currently, however, contemplate any material acquisitions for
fiscal 2000.
The Company plans to spend between $3.0 and $4.0 million on capital expenditures
during the fiscal year ending June 30, 2000, in order to handle its expected
increased sales volume of SMA and superelastic materials. Through March 31,
2000, approximately $1,900,000 of such amount has been expended. The Company
expects that it will be able to pay for these expenditures through a combination
of cash flow generated through operations, increased borrowings, and sale of
stock.
In connection with a December 1994 subordinated debt financing, the Company
granted Connecticut Innovations, Incorporated ("CII"), currently the holder of
both common stock and warrants of the Company, a "put" right if at any time
before the earlier of June 28, 2006 and the date on which CII ceases to hold at
least 35% of the common stock underlying the convertible securities originally
issued to it, the Company ceases to (a) maintain its corporate headquarters and
all of its product business operations in the State of Connecticut (including
the assembly of all products to be sold to U.S. Surgical Corporation), excluding
the Company's components and sub-assembly business acquired from Raychem, (b)
base its president and chief executive officer, a majority of its senior
executives, and all of its administrative, financial, research and development,
marketing and customer service staff relating to its product business (subject
to the same inclusions and exclusions as clause (a)) in the State of
Connecticut, (c) conduct all of its operations relating to its product business
directly or through subcontractors and through licensed operations in the State
of Connecticut (subject to the same inclusions and exclusions as clause (a)),
and (d) maintain its principal bank accounts with banks located in the State of
Connecticut (provided, however, that assets, revenues, employees, operations and
bank accounts attributable to any entity acquired by the Company shall not be
considered when determining if the Company has satisfied such requirements so
long as such entity (1) was acquired in an arm's length transaction, (2) was not
an affiliate of the Company and was not controlled by an affiliate of the
Company prior to such acquisition, and (3) had been in existence and operating
as a business for at least one year at the time of the acquisition). Upon CII's
exercise of its put, the Company shall be obligated to purchase from CII all the
Company's Common Stock then owned by CII and underlying warrants then owned by
CII at a price equal to the greater of the then current market price of the
Company's common stock or $2.00 per share, less, in either event, the aggregate
amount of unpaid exercise prices of all warrants put to the Company. Using $3.00
per share, which was approximately the market price for the Company's common
stock on April 28, 2000, as the put price per share, the aggregate put price
that would have to be paid by the Company if the put were exercised would be
approximately $7.1 million. To the extent that the current market value of the
Company's common stock exceeds $3.00 per share at any time, the put price would
be greater. If CII were to have the right to put its securities and were to
choose to exercise that right, it would have a serious adverse effect on the
Company's liquidity and the Company would most likely have to seek equity
financing to be able to meet its obligations to CII. However, the Company
believes that it has the ability to insure that its operations do not move from
Connecticut in a manner that would trigger CII's put.
The Company believes that the combination of its borrowing facility, its ability
to raise equity capital in the past and what it believes will be material net
profits from operations during the last quarter of fiscal 2000 will be
sufficient to meet the Company's capital requirements during the remainder of
the fiscal year.
EURO CONVERSION
The Company conducts business in multiple currencies, including the
currencies of various European countries in the European Union which began
participating in the single European currency by adopting the Euro as their
common currency as of January 1, 1999. During the period January 1, 1999 to
January 1, 2002, the existing currencies of the member countries will remain
legal tender and customers and vendors of the Company may continue to use these
currencies when conducting business. Currency rates during this period, however,
will no longer be computed from one legacy currency to another but instead will
first be converted into the Euro. The Company continues to evaluate the Euro
conversion and the impact on its business, both strategically and operationally.
At this time, the conversion to the Euro has not had, nor is expected to have, a
material adverse effect on the financial condition or results of operations of
the Company.
13
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PART II - OTHER INFORMATION
The statements in this quarterly report on Form 10-QSB that are not historical
fact constitute "forward-looking statements". Said forward-looking statements
involve risks and uncertainties which may cause the actual results, performance
or achievements of the Company and its subsidiaries to be materially different
from any future results, performance or achievements, express or implied by such
forward-looking statements. These forward-looking statements are identified by
their use of forms of such terms and phrases as "expects", "intends", "goals",
"estimates", "projects", "plans", "anticipates", "should", "future", "believes"
and "scheduled".
The variables which may cause differences include, but are not limited to, the
following: general economic and business conditions; competition; success of
operating initiatives; operating costs; advertising and promotional efforts; the
existence or absence of adverse publicity; changes in business strategy or
development plans; the ability to retain management; availability, terms and
deployment of capital; business abilities and judgment of personnel;
availability of qualified personnel; labor and employee benefit costs;
availability and costs of raw materials and supplies; and changes in, or failure
to comply with, government regulations. Although the Company believes that the
assumptions underlying the forward looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements included in this filing will
prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company or any other person
that the objectives and expectations of the Company will be achieved.
ITEM 2. CHANGES IN SECURITIES
On January 27, 2000, the Company sold 10,000 shares of its common stock to
Philippe Poncet upon exercise of warrants to purchase shares of the Company's
common stock at a price of $0.01 per share. Mr. Poncet is an employee of the
Company. The offer and sale to Mr. Poncet was exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act")
pursuant to Section 4(2) of the Securities Act.
14
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit Number Description of Exhibits
- -------------- --------------------------
27 Financial Data Schedule*
*Filed separately herewith.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by undersigned, thereunto duly
authorized.
Memry Corporation
Date: May 10, 2000 /s/ James G. Binch
- ------------------ -----------------------------------
James G. Binch
CEO and Chairman
of the Board
Date: May 10, 2000 /s/ Robert P. Belcher
- ------------------ -----------------------------------
Robert P. Belcher
Chief Financial Officer, Treasurer,
and Secretary
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 3-5 OF THE COMPANY'S FORM 10-QSB FOR THE PERIOD-TO-DATE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 683,000
<SECURITIES> 0
<RECEIVABLES> 4,834,000
<ALLOWANCES> 0
<INVENTORY> 2,773,000
<CURRENT-ASSETS> 8,423,000
<PP&E> 9,664,000
<DEPRECIATION> 3,462,000
<TOTAL-ASSETS> 20,119,000
<CURRENT-LIABILITIES> 7,231,000
<BONDS> 0
0
0
<COMMON> 211,000
<OTHER-SE> 11,068,000
<TOTAL-LIABILITY-AND-EQUITY> 20,119,000
<SALES> 17,465,000
<TOTAL-REVENUES> 18,261,000
<CGS> 11,008,000
<TOTAL-COSTS> 11,403,000
<OTHER-EXPENSES> 6,325,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 267,000
<INCOME-PRETAX> 329,000
<INCOME-TAX> 54,000
<INCOME-CONTINUING> 275,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 275,000
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.01
</TABLE>
