- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1997
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 0-16672
Power Spectra, Inc.
(Exact Name of Registrant as Specified in its Charter)
California 94-2687782
- --------------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
919 Hermosa Court
Sunnyvale, CA 94086-4103
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(Address of principal executive offices) (Zip Code)
(408) 737-7977
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year, if changed since last
report)
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 Act of 1934 during the
preceding 12 months (or for such shorter periods 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 of the latest practicable date.
Outstanding at
Class November 13, 1997
------------------- -----------------
Shares of Common 23,869,851
Stock, no par value
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<PAGE>
Power Spectra, Inc.
Item 1: Financial Statements
<TABLE>
Balance Sheets
(In thousands)
<CAPTION>
September 30, December 31,
Assets: 1997 1996
-------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 474 $ 843
Accounts receivable 42 70
Unbilled receivables 0 26
Inventories, principally purchased parts 439 218
Other current assets 32 49
-------- --------
Total current assets 987 1,206
Equipment, furniture and
leasehold improvements 1,363 1,355
Less, accumulated depreciation (1,082) (987)
-------- --------
Net fixed assets 281 368
Patents (net of amortization) 80 73
Other assets 27 26
-------- --------
Total assets $ 1,375 $ 1,673
======== ========
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable $ 168 $ 161
Accrued compensation expense 130 145
Deferred contract revenue 433 433
Allowance for contract losses 100 100
Accrued professional fees 113 76
Preferred stock dividend payable 192 49
Other current liabilities 28 28
-------- --------
Total current liabilities 1,164 992
Stockholders' equity:
Preferred stock 1,666 1,666
Common stock 15,475 14,078
Accumulated deficit (16,930) (15,063)
-------- --------
Total stockholders' equity 211 681
-------- --------
Total liabilities & stockholders'
equity $ 1,375 $ 1,673
======== ========
<FN>
See notes to financial statements.
</FN>
</TABLE>
2
<PAGE>
Power Spectra, Inc.
Item 1: Financial Statements
<TABLE>
Statements of Operations
(In thousands except per Share data)
<CAPTION>
Nine Months Ended Three Months Ended
----------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue $ 668 $ 652 $ 81 $ 294
Costs and expenses:
Cost of revenue 1,284 1,830 379 634
Sales and marketing 106 292 18 63
Research and development 274 523 121 276
General and administrative 742 928 248 292
------- ------- ------- -------
Total operating costs 2,406 3,573 766 1,265
------- ------- ------- -------
Operating loss (1,738) (2,921) (685) (971)
Other income 16 77 3 23
------- ------- ------- -------
Loss before income taxes (1,722) (2,844) (682) (948)
Provision for income taxes 1 1 -- --
------- ------- ------- -------
Net loss $(1,723) $(2,845) $ (682) $ (948)
======= ======= ======= =======
Net loss applicable to common
shares $(1,866) $(2,991) $ (730) $ (997)
======= ======= ======= =======
Net loss per common share $ (0.10) $ (0.19) $ (0.04) $ (0.06)
======= ======= ======= =======
<FN>
See notes to financial statements.
</FN>
</TABLE>
3
<PAGE>
Power Spectra Inc.
Item 1: Financial Statements
Statements of Cash Flows
(In thousands)
Nine Months Ending
---------------------------
September 30, September 30,
1997 1996
------- -------
Cash flows from operating activities:
Net loss $(1,723) $(2,845)
Adjustments to reconcile net loss
to cash used in operating activities:
Depreciation and amortization 104 107
Common stock issued for services 56 69
Changes in assets and liabilities:
Accounts receivable 27 284
Unbilled receivables 26 40
Inventories (221) (26)
Other current assets 17 (5)
Accounts payable 7 15
Accrued compensation expense (15) 22
Preferred stock dividend payable 143 --
Deferred contract revenue -- 379
Other current liabilities 37 (25)
------- -------
Net cash used in operating activities (1,542) (1,985)
Cash flows from investing activities
Furniture and equipment additions and disposals, net -- (60)
Patent additions (24) (25)
Increase in other assets (1) (6)
------- -------
Net cash used in investing activities (25) (91)
Cash flows from financing activities
Preferred stock dividend (143) (146)
Proceeds from sale of common stock 1,341 2,063
------- -------
Net cash used in financing activities 1,198 1,917
------- -------
Net increase (decrease) in cash and cash equivalents (369) (159)
Cash and cash equivalents, beginning of period 843 2,395
------- -------
Cash and cash equivalents, end of period $ 474 $ 2,236
======= =======
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest $ -- $ 1
======= =======
Income taxes $ 1 $ 1
======= =======
See notes to financial statements.
4
<PAGE>
Power Spectra Inc.
Notes to Financial Statements
September 30, 1997
1. Basis for Presentation:
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. 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 nine month period ended September 30, 1997
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to "Factors Affecting
Future Results, " and to the financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
2. Per Share Data:
Per share information for the quarter ended September 30, 1997 is computed
based on the net loss after deducting Series A and Series B Preferred Stock
dividends in 1997. The weighted average number of shares outstanding consists of
the common stock. The effect of common stock equivalents which would arise from
the exercise of common stock options and warrants outstanding (using the
treasury stock method) and the conversion of Series A and Series B Preferred
Stock have not been included for the quarter and for the nine months ended
September 30, 1997 and September 30, 1996, as their effect is anti-dilutive. The
weighted average number of shares outstanding at September 30, 1997 and
September 30, 1996 were 18,934,600 and 15,402,445, respectively for the nine
month periods, and were 20,693,088 and 16,058,190, respectively for the third
quarter periods.
3. Common Stock:
On September 30, 1997 the Company closed the first tranche of a private
placement of its common stock with a maximum gross proceeds to be raised from
the offering of $1,200,000. Gross proceeds raised through September 30, 1997
were $340,500. The Company has agreed to use its best efforts to file a
registration statement covering the resale of Shares offered within 60 days of
the completion of the offering and to use its best efforts to obtain
effectiveness thereof as promptly as possible thereafter. If the registration
statement is not effective within 120 days of the final closing, the Company
will issue additional shares of Common Stock to the investors in an aggregate
dollar amount equal to 2% of the gross proceeds received in the offering at the
original issue price of $0.375, for each 30-day delay in such effectiveness.
The placement closed November 13, 1997. Gross proceeds raised through
November 13, 1997 were $1,200,000. The Company agreed to pay a selling agent a
cash placement fee equal to 8% of the gross proceeds of the offering. In
addition, the Company has
5
<PAGE>
agreed to issue the setting agent Warrants to purchase Common Stock exercisable
for a number of shares equal to 5% of the total number of shares sold in the
offering. The selling agent's Warrants will be exercisable at $0.375 per share
(equal to the offering price of the shares) and will be exercisable for a period
of five years commencing on the earlier of one year from the date of issuance or
the effective date of the registration statement covering the resale of shares
issuable upon exercise of such warrants. In recognition of financial consulting
services previously rendered, the Company has agreed to sell the selling agent
additional five-year Common Stock purchase warrants, entitling the holder
thereof to purchase up to an aggregate of an additional 160,000 shares of Common
Stock at an exercise price of $0.375 per share. The purchase price for these
warrants is $400. The shares issuable upon exercise of the warrants will be
included in the registration statement to be filed on behalf of the investors.
6
<PAGE>
Power Spectra Inc.
Item 2:
Management's Discussion and Analysis of Financial
Condition and Results of Operations
This Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The forward-looking statements contained herein are subject to certain
risks and uncertainties, including those discussed herein and in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, that
could cause actual results to differ materially from those projected or
discussed. Investors are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. The Company undertakes no obligation to publicly release the
results of any revision to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. For the convenience of the reader, the
Company has attempted to identify forward-looking statements contained in this
report with an asterisk (*). However, the omission of an asterisk should not be
presumed to mean that a statement is not a forward looking statement within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act.
Results of Operations:
Revenues for the three months and nine months ended September 30, 1997 were
$81,000 and $668,000, respectively, compared to $294,000 and $652,000,
respectively, for the same periods ended September 30, 1996, an decrease of
$113,000 for the quarterly period and an increase of $16,000 for the nine-month
period, respectively. Revenues in the first nine months of 1997 from the
Company's $1,200,000 contract with LandRay Technologies, Inc. (LandRay), a joint
venture partially owned by the Company, were $500,000, or 75% of total revenues.
Revenues from a contract from the U.S. Air Force were $242,000, or 37% of total
revenues, and revenues from an earlier contract with LandRay were $293,000 or
45% of total revenues, in the first nine months of 1996. Revenues from other
contracts and products increased by $51,000 in the first nine months of 1997
from the same period in 1996.
The 1997 third quarter net loss was $682,000, a decrease of $266,000 over
the net loss of $948,000 recorded in the 1996 third quarter. A net loss of
$1,723,000 was recorded for the first nine months of 1997 compared to a net loss
of $2,845,000 for the same period in 1996. This decrease was attributable to a
$1,167,000 decrease in expenditures, and a $16,000 increase in revenues offset
by a $61,000 decrease in interest income.
The cost of revenue decreased by $255,000 for the third quarter of 1997 and
decreased by $546,000 for the first nine months of 1997 over the same periods in
1996 due to reduced overhead expenditures. Sales and marketing expenses
decreased by $45,000 and $186,000 for the third quarter and first nine months
ended September 30, 1997, respectively, over the same periods in 1996 as a
result of reduced personnel, consulting, and travel costs. The 1997 research and
development
7
<PAGE>
expenses decreased by $155,000 for the third quarter and decreased by $249,000
for the first nine months over the same periods in 1996 due to reduced
expenditures on consulting and other outside services. General and
administrative costs also decreased by $44,000 and $186,000 for the third
quarter and first nine months of 1997 from 1996 levels due primarily to reduced
personnel costs.
Other income decreased in the third quarter and first nine months of 1997
compared to the same period of 1996 by $20,000 and $61,000, respectively, as a
result of lower interest income.
Liquidity and Capital Resources:
During the 1997 first nine months, cash and cash equivalents decreased by
$369,000 due to the net loss from operations, increased receivables and
inventories offset by the sale of common stock. Accounts receivable and unbilled
receivables increased by $53,000 net, or 42%, as combination of product
shipments, moving unbilled to billed receivables, and milestone completion under
the LandRay contract. Inventories increased by 101%, or $221,000, from December
31, 1996, in anticipation of increased industrial product sales. Other current
assets decreased by $17,000 primarily due to expiration of prepaid insurance
during the period.
Accounts payable decreased 40% from December 31, 1996, to $97,000 at
September 30, 1997 due primarily to reduced operating costs. The accrued
compensation expense balance increased by $15,000, an 11% increase over the
balance at December 31, 1996, primarily due to the timing of payroll
expenditures. The $143,000 increase in other current liabilities was due
primarily to deferral to later periods of the accrued dividends on the Series A
and Series B Preferred Stock.
Backlog at September 30, 1997, was $717,145 of which 98% consisted of
commitments under the LandRay contract as opposed to the September 30, 1996
where backlog was $381,670 of which 67% was commitments under a prior LandRay
contract. Management expects the current LandRay contract to be completed by
February 28, 1998*, although there is no assurance that the contract will be
completed on this schedule.
As part of the terms of the research agreement between The Boeing Company
("Boeing") and Power Spectra, whose active period extended from 1989 to 1996,
Boeing provided equipment for Power Spectra's use in that research. The
equipment, principally purchased between 1991 and 1993, had a price
approximating $2,800,000. Upon termination of the active portion of the
agreement in 1996, Boeing and Power Spectra amended the agreement to allow
continued rent free use of the equipment so long as Power Spectra maintained the
equipment within the facility which Power Spectra leases from Boeing's
subsidiary, ARGOSystems, Inc., and insured it for replacement value, nominally
$2,800,000. A significant portion of the research agreement equipment was
incorporated into or used in conjunction with systems which were
semi-permanently attached to the facility. Upon termination of the facility
lease, Power Spectra was required to restore the premises to its original
condition with allowance for reasonable wear and tear. Since Power Spectra could
not restore the facility to original condition without removal of the equipment,
and could not remove the equipment for which it did not have title, Boeing and
Power Spectra, on 17 September 1997, again modified the research agreement with
respect to the equipment, thereby transferring title to the equipment from
Boeing to Power Spectra. Power Spectra is responsible for any taxes related to
the transfer and ongoing possession of the equipment, and for
8
<PAGE>
the equipment's removal and/or disposal from the premises leased at or before
the termination of the lease, and for restoration of the premises to its
original condition with allowance for reasonable wear and tear.
On September 30, 1997 the Company closed the first tranche of a private
placement of its common stock with a maximum gross proceeds to be raised from
the offering of $1,200,000. Gross proceeds raised through September 30, 1997
were $340,500. The Company has agreed to use its best efforts to file a
registration statement covering the resale of Shares offered within 60 days of
the completion of the offering and to use its best efforts to obtain
effectiveness thereof as promptly as possible thereafter. If the registration
statement is not effective within 120 days of the final closing, the Company
will issue additional shares of Common Stock to the investors in an aggregate
dollar amount equal to 2% of the gross proceeds received in the offering at the
original issue price of $0.375, for each 30-day delay in such effectiveness.
The placement closed November 13, 1997. Gross proceeds raised through November
13, 1997 were approximately $1,200,000. The Company agreed to pay a selling
agent a cash placement fee equal to 8% of the gross proceeds of the offering. In
addition, the Company has agreed to issue the setting agent Warrants to purchase
Common Stock exercisable for a number of shares equal to 5% of the total number
of shares sold in the offering. The selling agent's Warrants will be exercisable
at $0.375 per share (equal to the offering price of the shares) and will be
exercisable for a period of five years commencing on the earlier of one year
from the date of issuance or the effective date of the registration statement
covering the resale of shares issuable upon exercise of such warrants. In
recognition of financial consulting services previously rendered, the Company
has agreed to sell the selling agent additional five-year Common Stock purchase
warrants, entitling the holder thereof to purchase up to an aggregate of an
additional 160,000 shares of Common Stock at an exercise price of $0.375 per
share. The purchase price for these warrants is $400. The shares issuable upon
exercise of the warrants will be included in the registration statement to be
filed on behalf of the investors.
Factors Affecting Future Results:
The actual amount of time that the Company's cash resources last is
dependent upon a variety of factors including the timing of obtaining new
contracts, the timing of new financings, the success of its current joint
ventures and the competition with other vendors. The Company has commenced
efforts to obtain additional equity financing. If any additional funds are
raised through the issuance of equity securities, the percentage ownership of
the shareholders of the Company will be reduced, shareholders may experience
significant dilution and such equity securities may have rights, preferences or
privileges senior to those of the Company's Common Stock. There can be no
assurance that additional financing will be available, or that if available,
such financing will have terms favorable to the Company or its present
shareholders. Any failure to secure adequate funding could result in the Company
becoming unable to meet its obligations as they come due. In addition, if the
Company is not successful in replacing the revenue and cash generated by the
LandRay contract when it expires, the Company as presently sized, would continue
to experience substantial operating losses. The Company does not presently have
access to any credit facilities.
History of Losses; Accumulated Deficit. Since its inception, the Company
has generally operated
9
<PAGE>
at a loss since government contract revenues, which represent most of the
historical revenues of the Company, and other sources of income were
insufficient to cover general and administrative, research and development and
other costs incurred by the Company. The Company recorded net losses of
($3,788,299), ($2,562,230) and ($1,112,507) for the years ended December 31,
1996, December 31, 1995 and December 31, 1994, respectively. At December 31,
1996, the Company had an accumulated deficit of $15,062,956, which had increased
to $16,930,000 at September 30, 1997. The Company expects that it will continue
to incur losses for the foreseeable future and does not expect to become
profitable until its contract revenues increase substantially from current
levels or the Company begins to receive significant product sales and license
and/or royalty income. There is no assurance that the Company will achieve
profitable operations in the foreseeable future, if at all.
Dependence upon the LandRay Contract. The Company's relationship with LandRay
has been a significant source of revenues since the first contact was awarded to
the Company in 1996. Should the current contract with LandRay terminate for any
reason, it would be necessary to find alternative sources of revenue, and there
is no assurance that the Company would be successful in accomplishing this
result. If the Company is not successful in replacing the revenue and cash
generated by the LandRay contracts, the Company, will continue to experience
significant operating losses and significant negative cash flow. Although the
Company has substantially reduced the size of its operations over the last two
years, there can be no assurance that the Company's revenues and proceeds from
the equity financings will be sufficient to allow the Company to support its
operating expenses.
Need to Successfully Launch and Fund New Ventures. The Company believes it must
continue to seek and obtain other sources of revenue to continue operations.
Since its inception nearly all of the Company's revenues have come from
defense-related research and development contracts related to the BASS
development and applications. The Company currently is seeking to exploit its
technology in industrial applications. In the commercial and industrial markets,
the Company has identified a number of promising, new applications that include
radar systems for gathering high resolution data on underground pipelines and
other utilities, laser-based measurement systems, hazardous waste detection and
subterranean oil and mineral detection for geological exploration.* During 1996
the Company entered into two joint ventures, LandRay Technologies, Inc. and PEAC
Airborne Technologies, Ltd., in order to develop and exploit new business
opportunities which the Company believes are possible based upon its
ultra-wideband ground penetrating radar ("UWB GPR") technology. As of the date
hereof, the PEAC venture has not been funded and it continues to seek initial
funding. However the Company's venture with LandRay has progressed during 1997.
The purpose of the LandRay venture is to develop UWB GPR systems for remote
sensing, detection, location and imaging of subterranean metal deposits and
geophysical profiles to aid in the exploration of minerals and fossil fuels.
Among LandRay's objectives are to (i) prove the feasibility of the Company's
proprietary impulse generator technology for the exploration of metal, mineral
and oil and gas formations, and (ii) develop and exploit systems using the
Company's technology. To date the Company has been successful in meeting the
established technical milestones under its contract with LandRay. On 9 October
1997, the Company announced that it had located gold deposits through eight feet
of quartz and that its finds exceeded 100 troy ounces. To date, finds have
exceeded 200 troy ounces of gold. There is no assurance, however, that LandRay
and the Company will continue to be successful in this regard, or that the
technology and equipment can be successfully applied to commercial operations.
Failure of LandRay and the Company to continue to adequately demonstrate such
feasibility and thus garner new business, will have a
10
<PAGE>
material adverse impact on the Company's revenues and cash flows. Both the PEAC
and LandRay ventures will require additional funding in order to enable the
Company and its joint venture partners to carry out their respective plans of
operations. There can be no assurances that the proposed PEAC joint venture will
be consummated, that the PEAC and LandRay joint ventures will be able to raise
adequate funding on acceptable terms, that the Company will be able to
successfully enter into any additional suitable partnership or joint venture
arrangements or that such arrangements, when entered into, will prove to be
beneficial for the Company and its shareholders. There also can be no assurance
that the proposed joint venture agreements, if consummated, will generate
sufficient revenues to replace the existing LandRay contract when it expires.
Failure to succeed in one or more strategic partnerships or joint venture
relationships could have a material adverse effect on the Company's plan of
operations and results.
Volatility of Stock Price. The market price of the Common Stock is highly
volatile. Factors such as variations in the Company's operating results and
announcements of technological innovations or price reductions by the Company,
its competitors or providers of alternative products and processes may cause the
market price of the Common Stock to fluctuate substantially. In addition, the
securities markets have recently experienced substantial price and volume
fluctuations that have particularly affected technology-based companies, and
resulted in changes in the market prices of the stocks of many companies that
have not been directly related to the operating performance of those companies.
The price of the Company's Common Stock is particularly susceptible to extreme
fluctuation because of thin trading volume in the Common Stock and lack of
widely available pricing information.
11
<PAGE>
Power Spectra Inc.
Part II - Other Information
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
On September 30, 1997, October 31, 1997 and November 13, 1997,
the Company issued an aggregate of 3,200,000 shares of its
Common Stock to certain investors, for an aggregate gross
purchase price of $1,200,000. The Company employed Morgan
Fuller Capital Group as placement agent in connection with
this transaction. The Company agreed to pay the selling agent
and its sub-agents a cash placement fee equal to 8% of the
gross proceeds of the transaction. The Company has agreed to
issue to the selling agent warrants exercisable for a number
of shares of Common Stock equal to 5% of the total number of
shares sold in the offering. In addition, in recognition of
financial consulting services previously rendered, the Company
has agreed to sell the selling agent additional five-year
Common Stock purchase warrants, entitling the holder thereof
to purchase up to an aggregate of an additional 160,000 shares
of Common Stock at an exercise price of $0.375 per share. The
purchase price for these warrants is $400. The Company has
agreed to register for resale the shares of Common Stock
issued in the private placement, as well as the shares
issuable upon exercise of the selling agent's warrants. The
Common Stock was issued without registration under the
Securities Act in reliance on Section 4(2) of the Securities
Act and Regulation D promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
a. The Company held its Annual Meeting of Shareholders (the
"Meeting") on July 25, 1997. Proxies were solicited for the
Meeting.
b. At the Meeting, the following directors were elected: Harold
T. Bowling, James A Glaze, Jay W. Hubbard, Gene J. Kennedy,
James A. Lovell, Jr., John W. Pauly, and Gordon H. Smith.
12
<PAGE>
<TABLE>
c. The following matters were voted upon as indicated.
Election of Directors
<CAPTION>
Number of Votes Elected For
-------------------------- -------------
Name For Withheld One Year Term
---- ------------ -------- -------------
<S> <C> <C> <C> <C>
Harold T. Bowling 17,539,674 537,525 Yes
James A. Glaze 17,540,474 536,725 Yes
Jay W. Hubbard 17,538,154 539,045 Yes
Gene J. Kennedy 17,500,104 577,095 Yes
James A. Lovell, Jr. 17,539,754 537,445 Yes
John W. Pauly 17,506,074 571,125 Yes
Gordon H. Smith 17,541,154 536,045 Yes
</TABLE>
<TABLE>
Approval of Amendment to Articles of Incorporation
<CAPTION>
Number of Votes
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
For: 13,385,444 Against: 4,556,654 Abstained: 135,101
---------- --------- -------
Approval of Amendment to 1991 Director Stock Plan
Number of Votes
---------------------------------------------------------------------------------------
For: 16,225,702 Against: 1,634,858 Abstained: 216,639
---------- --------- -------
Ratification of Grant Thornton
Number of Votes
---------------------------------------------------------------------------------------
For: 17,832,657 Against: 26,912 Abstained: 217,630
---------- ------ -------
</TABLE>
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10.1 Research Agreement between Registrant and The Boeing
Company, as amended September 17, 1997
27.1 Financial Data Schedule
b. Reports on Form 8-K during the quarter ended September 30,
1997
During the period covered by this report, the Company did not
file any reports on Form 8-K.
13
<PAGE>
Power Spectra Inc.
September 30, 1997
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.
Power Spectra Inc.
Date: November 14, 1997 By: /s/ Edward J. Lamb
------------------ -----------------------
Edward J. Lamb
Chief Financial Officer
14
<PAGE>
Exhibit Index
Exhibit
No. Description
- ------- ------------
10.1 Research Agreement between the Registrant and The Boeing
Company, as amended 17 September 1997
27.1 Financial Data Schedule
15
Exhibit 10.1
AMENDMENT NUMBER 12 TO
RESEARCH AGREEMENT 9-1110-JET-103
This AMENDMENT, designated as AMENDMENT Number 12, effective as 17 September
1997, is entered by and between POWER SPECTRA, INC., having a place of business
n Sunnyvale, California (hereinafter referred to as "PSI") and THE BOEING
COMPANY, (including its subsidiaries and affiliates) acting through its Defense
& Space Group, having a place of business at Seattle, Washington (hereinafter
referred to as "BOEING").
WHEREAS, the parties have previously entered into that certain Research
Agreement 9-1110-JET-103 dated September 21, 1989, and Amendments 1-11 thereto;
and
WHEREAS, since 1990, PSI has used on its premises certain capital and other
equipment owned by Boeing, all such equipment being now identified in Attachment
A hereto; and
WHEREAS, PSI is currently leasing commercial facilities and office space from
ARGOSystems, Inc., a wholly owned subsidiary of Boeing, pursuant to the
ARGOSystems/PSl Lease Agreement dated 22 November 1991, as amended;
WHEREAS, BOEING wishes to transfer to PSI, the capital and other equipment
identified in Exhibit A, for no consideration except as described herein, and
PSI wishes to accept such capital and other equipment under the terms described
herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Notwithstanding any other provision of Research Agreement 9-1110-JET-103, as
amended, effective on the date of this Amendment, BOEING transfers fulI title,
conveys, and gives to PSI, for the consideration described herein, the capital
and the other equipment described in Attachment A.
2. PSI is accepting this equipment for use and not for scrap or disposal.
Nonetheless, PSI assumes all responsibility to dispose of any capital and other
equipment of Attachment which It may not wish to retain, such disposal to be
fully compliant with all federal, State, local, and community laws, regulations,
and requirements, at no cost or expense to BOEING or ARGOSystems. Upon
termination of the ARGOSystems/PSI lease agreement dated 22 November 1991, PSI,
as owner of the capital and other equipment in Attachment A, shall remove it all
completely from the leased premises, restoring such promises to its original
condition (with allowance for reasonable wear and tear), at no cost or expense
to BOEING or to ARGOSystems.
3. DISCLAIMER. PSI accepts this equipment "AS IS" and without any warranty. PSI
HEREBY WAIVES ALL OTHER WARRANTIES, GUARANTEES, OBLIGATIONS. LIABILITIES, RIGHTS
AND REMEDIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY ARISING
FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE, ANY IMPLIED
WARRANTY OF FITNESS, AND ANY OBLIGATION OR LIABILITY OF BOEING, ITS
SUBSIDIARIES, AFFILIATES (AND RESPECTIVE DIRECTORS, OFFICIERS AND EMPLOYEES)
ARISING FROM TORT, OR FOR LOSS OFUSE, REVENUE OR PROFIT, OR FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES.
<PAGE>
Page 2, Amendment 12 to Research Agreement 9-1110-JET-103
4. SPECIAL TERMS REGARDING HAZARDOUS SUBSTANCES AND/OR RADIOACTIVE MATERIALS.
The capital and other equipment may contain hazardous substances and/or
radioactive materials which, upon the end of the equipment's useful life, may
require special handling for final disposition.
Release. PSI has satisfied itself regarding the condition of the capital and
other equipment covered by this Agreement. Upon taking title of this equipment,
PSI hereby agrees to assume complete responsibility for handling, management,
transport, and use of the capital and other equipment, and if undertaken by
Power Spectra, the removal and disposal of any hazardous substances and/or
radioactive materials therein or thereon, in accordance with existing federal,
state and local laws and regulations. Power Spectra further assumes all
responsibility to provide appropriate personal protective measures for itself,
its employees, agents and assigns, as well as any third parties potentially
exposed to any hazardous substances and/or radioactive materials from the
capital and other equipment. PSI releases The Boeing Company. its subsidiaries,
affiliates and their respective directors, officers, employees, agents from any
and all liability arising from or related to the hazardous substances and/or
radioactive materials now contained in or on the capital and other equipment
obtained hereunder.
Indemnity. PSI shall defend, indemnify and hold harmless The Boeing Company, Re
subsidiaries, affiliates and their respective directors, officers, employees,
agents (hereinafter referred to as "INDEMNITIES"') from and against all actions,
causes of action, liabilities. claims, liens. suits. judgments, awards, fines,
penalties, and damages, of any kind and nature whatsoever brought or claimed by
Boeing or any other party and expenses and costs of litigation and counsel fees
related thereto, or incident to establishing the right to indemnification,
arising out of or in any way connected with any cleanup, containment, remedial,
removal or restoration work required or performed by any federal, state or local
governmental agency or political subdivision, or performed by any
non-govemrmntal entity or person, including The Boeing Company, because of the
presence or suspected presence, release or threatened or suspected release of
hazardous substances and/or radioactive materials in or into the environment at
on about under or within any property or any disposal site used by PSI, relating
to the capital equipment and any claims of third parties for loss, injury, or
damage to persons or property arising from or related to any residual hazardous
substances and/or radioactive materials now contained in or on the capital or
other equipment obtained hereunder.
5. All other provisions of the Research Agreement of September 21, 1989, as
amended, shall remain unchanged.
IN WITNESS WHEREOF, the authorized representatives of the parties hereto have
executed this Amendment No. 12 in duplicate originals.
The Boeing Company Power Spectra, Inc.
Defense & Space Group
By: J.C. Hart By: E. J. Lamb
---------------------------------- ----------------------------
J. C. Hart Edward Lamb
Title: Contracts Manager Title: Contracts Manager
Research & Technology
Date: 9-12-97 Date: 9-17-97
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements in the Quarterly Report on Form 10-Q of Power Spectra, Inc.
for the nine months ended September 30, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000777527
<NAME> Power Spectra, Inc.
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<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> SEP-30-1997
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0
1,666
<OTHER-SE> (16,930)
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<SALES> 668
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<CGS> 1,284
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</TABLE>
