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 period ended SEPTEMBER 30, 1995
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 0-15198
Osmic, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 38-2640630
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1788 NORTHWOOD, TROY, MICHIGAN 48084
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 362-1290
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 Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No
As of October 31, 1995 there were 1,970,894 shares of Common Stock
outstanding.
Page 1 of 7
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<TABLE>
<CAPTION>
Osmic, Inc.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,
1995 1994
<S> <C> <C>
Net product sales $ 605,350 $ 301,580
Cost of products sold 228,825 90,460
Gross profit 376,525 211,120
Other operating revenue:
Revenue from business agreements - 27,565
Other revenue 14,300 25,293
Total other operating revenue 14,300 52,858
Operating expenses:
Cost of revenues from business agreements - 27,565
Direct product development and research 87,572 134,782
Patent fees and expenses 12,265 10,994
Selling, general & administrative 155,582 117,562
Total operating expenses 255,419 290,903
Operating income (loss) 135,406 (26,925)
Interest income 8,955 -
Income (loss) before income taxes 144,361 (26,925)
Provision for income taxes 58,000 -
Net income (loss) $ 96,361 $(26,925)
Net income (loss) per common share $ 0.04 $ (0.01)
See notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Osmic, Inc.
BALANCE SHEETS
September 30, June 30,
1995 1995
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 881,092 $ 879,922
Accounts receivable 384,024 355,275
Inventories 130,366 163,153
Prepaid expenses and other current assets - 3,150
Total current assets 1,395,482 1,401,500
Other assets 54,999 60,000
Net property and equipment 132,169 86,310
$1,582,650
$1,547,810
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 241,869 $ 243,311
Accrued compensation 54,767 134,846
Total current liabilities 296,636 378,157
Stockholders' equity:
Preferred stock, no par value - -
Common stock, par value $.01 per share 19,709 19,709
Additional paid-in capital 755,632 755,632
Retained earnings 510,673 394,312
Total stockholders' equity 1,286,014 1,169,653
$1,582,650 $1,547,810
See notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Osmic, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended September 30,
1995 1994
<S> <C> <C>
Operating activities:
Net income (loss) $ 86,361 $ (26,925)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 13,554 22,241
Gain on sale of capital equipment (14,300) -
Changes in working capital:
Accounts receivable (28,749) 182,495
Inventories 32,787 15,992
Prepaid expenses and other current assets 3,150 (4,752)
Accounts payable (1,442) (72,165)
Accrued compensation (80,079) (7,474)
Net cash provided by operations 11,282 109,412
Investing activities:
Purchases of capital equipment (54,412) -
Proceeds from sale of capital equipment 14,300 -
Net cash (used in) investing activities (40,112) -
Financing activities:
Benefit of NOL carryforward 30,000 -
Net cash provided by financing activities 30,000 -
Increase in cash and cash equivalents 1,170 109,412
Cash and cash equivalents at beginning of period 879,922 304,332
Cash and cash equivalents at end of period $ 881,092 $ 413,744
Supplemental disclosures of cash flow information:
Cash equivalents:
Cash equivalents consists of investments in short-term, highly-liquid
securities having a maturity of three months or less from date of
acquisition.
See notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 1995
Basis of Presentation
Information for the three months ended September 30, 1995 and 1994
is unaudited but includes all adjustments which Osmic, Inc. ("Osmic")
considers necessary for a fair presentation of financial condition, cash
flows and results of operations.
In accordance with the instructions for the completion of the
Quarterly Report on Form 10-Q, certain information and footnotes necessary
to comply with generally accepted accounting principles have been condensed
or omitted. These financial statements should be read in conjunction with
Osmic's 1995 Annual Report on Form 10-K which contains a summary of Osmic's
accounting principles and other footnote information.
Revenue Recognition
Revenues from product sales are recognized upon shipment of the
product. Revenues from business agreements which are on a cost-plus basis
are recognized in accordance with the terms of the agreement. Revenues from
other business agreements are accounted for on a percentage of completion
basis; if there are losses, Osmic records losses at the time such losses
become apparent. All costs incurred by Osmic in connection with its
performance under these agreements are recorded in Osmic's financial
statements as cost of revenues from business agreements.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
As of September 30, 1995, Osmic had working capital of approximately
$1,099,000 including cash and cash equivalents of approximately $881,000.
Results of Operations
Three Months Ended September 30, 1995 Compared to Three Months Ended
September 30, 1994
The turnaround from a net loss of $(26,925) for the three months
ended September 30, 1994 compared to a net income of $86,361 for the three
months ended September 30, 1995 was primarily a result of increased product
sales.
The increase in product sales from $301,580 in the three months ended
September 30, 1994 to $605,350 in the three months ended September 30, 1995
was due to an increase in the number of units of X-ray dispersive mirrors
sold to original equipment manufacturers and an approximate $115,000 increase
in custom X-ray project sales.
<PAGE>
The revenue from business agreements of $27,565 during the three
months ended September 30, 1994 was a result of an agreement for the
development of the magnet technology which terminated in July 1994.
The decrease in other revenues from $25,293 in the three months ended
September 30, 1994 to $14,300 in the three months ended September 30, 1995
was due to a decrease in billings for various precision coating services
performed for third parties offset by gains recognized from the sale of idle
capital equipment.
The increase in cost of product sales from $90,460 in the three
months ended September 30, 1994 to $228,825 in the three months ended
September 30, 1995 was the result of increased X-Ray product sales. The
decrease in gross profit percentage from 70% to 62% for the respective
periods is a result of increased custom X-ray product sales as a percentage
of total product sales.
The cost of revenue from business agreements of $27,565 for the
three months ended September 30, 1994 was a result of an agreement for the
development of the magnet technology which terminated in July 1994.
The decrease in direct product development and research expense from
$134,782 in the three months ended September 30, 1994 to $87,572 in the three
months ended September 30, 1995 was due to more time needed to fulfill
current and future order requirements versus research and also the suspension
of the magnet program in fiscal year 1995.
The increase in selling, general and administrative expenses from
$117,562 in the three months ended September 30, 1994 to $155,582 in the
three months ended September 30, 1995 was due to increases in advertising,
travel and professional fees.
The income tax provision of $58,000 for the three months ended
September 30, 1995 is a result of the turnaround in the Company's
profitability. The tax benefit associated with utilizing the Company's
net operating loss carryforwards are reflected in the balance sheet as an
increase in retained earnings. The balance sheet also reflects a current
tax liability of $28,000.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. EXHIBITS
No exhibits are filed with this report.
B. REPORTS ON FORM 8-K
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No reports on Form 8-K were filed duuring the three months ended
September 30, 1995.
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.
Osmic, Inc.
(Registrant)
Date: October 27, 1995 By: /s/ Zvi Yaniv
Zvi Yaniv
Chairman of Board
By:/s/ Wes L. Hardenburg
Wes L. Hardenburg
Chief Financial Officer
