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 September 30, 1996
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 no. 0-15282
ADVANCED DETECTORS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0108869
(State or other jurisdiction of incorporation or organization) (I.R.S.
(Employer Identification No.)
1220-A Avenida Acaso, Camarillo, California 93012
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 484-8300
(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
requirement 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, 1996, there were 3,506,306 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes ___ No X
INDEX
ADVANCED DETECTORS, INC.
PART I - FINANCIAL INFORMATION Page
ITEM 1. Financial Statements (Unaudited)
Balance Sheets -
September 30, 1996 and March 31, 1996 3-4
Statements of Operations -
for the three and six month periods ended
September 30, 1996 and September 30, 1995 5
Statements of Cash Flows -
for the six month periods ended
September 30, 1996 and September 30, 1995 6
Notes to Financial Statements - September 30, 1996 7
ITEM 2. Management's Discussion and Analysis or
Plan of Operation 8-10
Part II - OTHER INFORMATION
Items 1 through 4 - Not Applicable
Item 5 - Other Information 11
Item 6 - Not Applicable
SIGNATURE 12
PART I - FINANCIAL INFORMATION
Item 1: FINANCIAL STATEMENTS
ADVANCED DETECTORS, INC.
BALANCE SHEET
September 30, March 31,
1996 1996
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 64,000 $ 326,000
Trade, contract and
grant receivables 79,000 53,000
Inventory 122,000 44,000
Prepaid expenses and other 7,000 43,000
TOTAL CURRENT ASSETS 272,000 466,000
EQUIPMENT AND LEASEHOLD IMP 781,000 780,000
Less accumulated depreciation (696,000) (653,000)
TOTAL EQUIPMENT 85,000 127,000
OTHER ASSETS
Deferred expenses 23,000 59,000
Deposits and other 12,000 12,000
TOTAL OTHER ASSETS 35,000 71,000
TOTAL ASSETS $ 392,000 $ 664,000
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and
accrued expenses $ 139,000 $ 162,000
Accrued salary to officer 381,000 381,000
Notes payable 280,000 11,000
Amounts due to related parties - 5,000
Accrued salaries and benefits - 66,000
TOTAL CURRENT LIABILITIES 800,000 625,000
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.01 per share, 15,000,000 shares"
authorized; 3,506,306 shares issued (3,490,583 shares"
outstanding at September 30, 1996 and
March 31, 1996) 35,000 35,000
Additional paid in capital 14,043,000 14,043,000
Accumulated deficit (14,427,000) (13,980,000)
Less cost of 15,723 shares
of Common Stock in treasury
67 shares of Special
Preferred Convertible
Stock in treasury (59,000) (59,000)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) (408,000) 39,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 392,000 $ 664,000
ADVANCED DETECTORS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
For the three months ended For the six months ended
September 30, September 30,
1996 1995 1996 1995
REVENUE
Trade, contract and
grant revenues $ 297,000 $ 316,000 $ 430,000 $ 525,000
Detector Sales 33,000 81,000
TOTAL REV 330,000 316,000 511,000 525,000
COSTS AND EXPENSES
COGS 20,000 32,000
R & D 200,000 348,000 496,000 664,000
G & A 263,000 258,000 433,000 522,000
TOTAL EXP 483,000 606,000 961,000 1,186,000
NET INC (LOSS) (153,000) (290,000) (450,000) (661,000)
Gain On Sale Of
Marketable Sec 2,078,000 2,166,000
INT/OTH INC 1,000 3,000 3,000 23,000
NET INC (LOSS) $ (152,000) $ 1,791,000 $ (447,000) $ 1,528,000
NET INCOME (LOSS)
PER SHARE $ (0.04) $ 0.51 $ (0.13) $ 0.44
Weighted average common and
common equivalent
shares outstanding 3,506,306 3,506,306 3,506,306 3,506,306
ADVANCED DETECTORS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
For the six months ended September 30,"
1996 1995
Operating activities:
Net income (loss) $ (447,000) $ 1,528,000
Adjustments to reconcile to net cash provided by
operating activities:
Depreciation 43,000 57,000
Gain on sale of
marketable securities - (2,166,000)
Changes in operating assets
and liabilities: -
Trade, contracts and
grants receivables (26,000) 115,000
Inventory (78,000)
Prepaid expenses and other 72,000 (65,000)
Accounts payable and
accrued expenses & other (94,000) 91,000
NET CASH USED BY
OPERATING ACTIVITIES (530,000) (440,000)
Investing activities:
Purchase of equipment 1,000 (11,000)
Other assets 35,000
NET CASH PROVIDED BY
INVESTING ACTIVITIES (1,000) 24,000
Financing activities:
Repayment on debt (11,000) (750,000)
Proceeds from sale of
marketable securities 2,166,000
Borrowings on debt 280,000
NET CASH (USED) PROVIDED BY
FINANCING ACTIVITIES 269,000 1,416,000
NET DECREASE IN CASH AND CASH
EQUIVALENTS (262,000) 1,000,000
Cash and cash equivalents
at beginning of period 326,000 253,000
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 64,000 $1,253,000
ADVANCED DETECTORS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1996
(Unaudited)
NOTE A--BASIS OF 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-QSB 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 three and six month periods
ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending March 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Annual Report of Advanced Detectors, Inc.
(the "Company") on Form 10-KSB for the fiscal year ended March 31, 1996.
NOTE B--NET INCOME (LOSS) PER SHARE
The weighted average number of common and common stock
equivalent shares outstanding was computed in accordance with
Accounting Principles Board (APB) Opinion No. 15. Common
stock equivalents were not considered in the calculation as their
effect would be antidilutive.
NOTE C--GOING CONCERN
Management has evaluated the Company's current financial
situation and its available resources and has implemented appropriate
plans such that it believes it can meet its obligations through
December 31, 1996. After that date, the Company will likely require
additional external financing to continue as a going concern. The
Company's success in obtaining external financing has to date been
very limited, and there can be no assurance that any additional efforts
will be successful. Accordingly, there is significant doubt about the
Company's ability to continue as a going concern following December 31, 1996.
NOTE D--BRIDGE FINANCING
In August 1996, the Company obtained $480,000 in bridge
financing from 8 persons, including certain of the Company's
directors, certain of its stockholders and others (the "Loans"). The
Loans bear interest at the prime rate determined by CoreStates Bank,
N.A. and interest and principal are payable in full on January 31, 1997.
The Loans are secured by a first lien and security interest in the
Company's assets and by a pledge by the Company of its stock option
to purchase 750,000 shares of common stock of Advanced Photonix, Inc.
Additionally, as an inducement to the lenders to make the Loans, each
lender was issued a five year warrant to purchase that number of shares
of the Company's Common Stock as equals the aggregate face amount of
the Loan made by such lender, at an exercise price of $.25 per share.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Three months ended September 30 ,1996 compared to the
Three months ended September 30, 1995
During the three months ended September 30, 1996, the
Company recognized revenue of $330,000 compared to $316,000
of revenue recognized during the three months ended
September 30, 1995. Revenues from the quarter ended
September 30, 1996 consisted of contract and grant revenues
of $297,000, a decrease of $19,000 from the comparable prior
year quarter, and $33,000 in revenues generated from sale of the
Company's Lead-in-Paint XRF detectors compared to no similar
revenue during the prior year comparable period. Of the contract
and grant revenue recognized during the quarter ended
September 30, 1996, Small Business Innovation Research ("SBIR")
grants with the National Institutes of Health ("NIH") accounted for
$214,000, or 72%, a contract with the Department of Energy ("DOE")
accounted for $69,000, or 23%, and a grant with the National
Aeronautics and Space Administration ("NASA") accounted for
$14,000, or 4%. The decrease in contract and grant revenue
compared to the quarter ended September 30, 1995 was attributable
to the completion of one of the SBIR grants with NIH prior to the
first quarter of fiscal year 1996.
The Company continues to submit proposals with various
government agencies and commercial entities. Effective
June 10, 1996, the NIH SBIR program awarded the Company
a six-month Phase 1 research contract for $99,917, entitled
"New Scintigraphy Mammography Camera". It is anticipated
that this revenue will be recognized over the third and fourth
quarters of fiscal year 1997.
Research and development expenses were $200,000 during the
three months ended September 30, 1996 compared to $348,000
incurred during the three months ended September, 30, 1995, a
decrease of $148,000 or 42%. The decrease was attributable to a
reduction in personnel and operating expenses. Of the $200,000
of research and development expenses incurred during the quarter
ended September 30, 1996, $132,000 or 66%, represented direct
costs associated with contract and grants, and $68,000, or 34%,
represented overhead costs associated with contract and grants.
Research and development costs are expected to continue to increase
as the Company heightens its efforts to commercialize its XRF
technology subject to careful monitoring of such costs in light
of the Company's current financial condition.
General and administrative expenses were $263,000 during the
three months ended September 30, 1996 compared to $258,000
during the corresponding period in fiscal 1995, an increase of
$5,000 or 1%. The increase resulted primarily from an increase
in costs associated with the commercialization of the XRF.
Interest and other income was $1,000 in the three months ended
September 30, 1996 compared to $3,000 in the corresponding period
in fiscal 1995, a decrease of $2,000. The decrease was primarily
attributable to the usage of available cash to fund operations during
the first half of fiscal year 1997.
RESULTS OF OPERATIONS (continued)
Six months ended September 30 ,1996 compared to the
Six months ended September 30, 1995
During the six months ended September 30, 1996, the
Company recognized revenue of $511,000 compared to
$525,000 of revenue recognized during the six months ended
September 30, 1995. Revenues from the quarter ended
September 30, 1996 consisted of contract and grant revenues
of $430,000 a decrease of $95,000 from the comparable prior
year quarter, and $81,000 in revenues generated from sale of
the Company's Lead-in-Paint XRF detectors compared to no
similar revenue during the prior year comparable period. Of the
contract and grant revenue recognized during the quarter ended
September 30, 1996, Small Business Innovation Research ("SBIR")
grants with the National Institutes of Health ("NIH") accounted for
$274,000 or 63%, a contract with the Department of Energy ("DOE")
accounted for $113,000 or 26%, and a grant with the
National Aeronautics and Space Administration ("NASA")
accounted for $43,000, or 10%. The decrease in contract and
grant revenue compared to the quarter ended September 30, 1995
was attributable to the completion of one of the SBIR grants with
NIH prior to the first quarter of fiscal year 1997.
The Company continues to submit proposals with various
government agencies and commercial entities. Effective
June 10, 1996, the NIH SBIR program awarded the Company
a six-month Phase 1 research contract for $99,917, entitled
"New Scintigraphy Mammography Camera". It is anticipated
that this revenue will be recognized over the second and third
quarters of fiscal year 1996.
Research and development expenses were $496,000 during the
six months ended September 30, 1996 compared to $664,000
incurred during the six months ended September, 30, 1995, a
decrease of $168,000 or 25%. The decrease was attributable to
a reduction in personnel and operating expenses. Of the $496,000
of research and development expenses incurred during the period
ended September 30, 1996, $332,000 or 67%, represented direct
costs associated with contract and grants, and $164,000 or 33%,
represented overhead costs associated with contract and grants.
Research and development costs are expected to continue to increase
as the Company heightens its efforts to commercialize its XRF
technology subject to careful monitoring of such costs in light of the
Company's current financial condition.
General and administrative expenses were $433,000 during the
six months ended September 30, 1996 compared to $522,000
during the corresponding period in fiscal 1995, a decrease of
$89,000 or 17%. The decrease resulted primarily from a reduction in
personnel costs, consulting fees and legal fees attendant to the
Company's reduction in operations.
Interest and other income was $3,000 in the six months ended
September 30, 1996 compared to $23,000 in the corresponding
period in fiscal 1995. The decrease was primarily attributable to
the usage of available cash to fund operations during the first
quarter of fiscal year 1996.
Liquidity and Capital Resources
The Company's principal sources of cash during the
six month period ended September 30, 1996 included research
contract and grant funding, which was used principally to offset
research and development costs and expenses associated with
performing such contracts as well as an allocable portion of overhead
associated with performing such contracts and proceeds from a
$480,000 loan made by certain of the company's directors,
stockholders and others (see note D to Condensed Financial Statements)
(the "Loans"). At September 30, 1996, the Company had
cash and cash equivalents of $64,000 and negative working
capital of $528,000.
Although the Company believes that its current government
funded research development contracts, grants and awards will
provide sufficient revenue to offset costs and expenses associated
with work performed under such contracts, the Company will
require substantial additional funding to meet its operating
objectives, including increasing sales of its XRF lead-in-paint
detector. Although the proceeds from the Loans have helped to
alleviate the Company's near-term cash shortfall the Company has
experienced a severe cash shortfall and, on occasion, had
implemented short-term shutdowns to preserve its cash resources
without jeopardizing its strategic objectives. The proceeds from
the Loans also have been used to pay for ongoing overhead expenses
and for other costs The ability of the Company to obtain such
additional funds will be dependent upon additional external
financing or other capital raising efforts. In light of the Company's
limited success in raising external financing, including equity
financing, there can be no assurance that any additional efforts
will be successful. Accordingly, there can be no assurance that the
Company will be able to continue as a going concern, without additional
external financing for fiscal year 1997.
PART II - OTHER INFORMATION
Item 5:
On November 5, 1996, Dr. James Gerberman resigned as
President and Treasurer and as a director of the Company.
On October 18, 1996, Bernhardt Denmark resigned as a director
of the Company. Following the 1996 annual meeting of
stockholders of the Company held on November 12, 1996, at which
Gilbert Goldstein, Nathan Greenberg, Richard Serbin,
Dr. Max Tesler and General John Wickham (USA Ret.) were
elected as directors of the Company, Dr. Max Tesler was
appointed Chairman of the Board, Chief Executive Officer
and Treasurer of the Company.
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.
Advanced Detectors, Inc.
(Registrant)
Date: November 17, 1996 /s/ Dr. Max Tesler
Dr. Max Tesler
Chairman of the Board of Directors,
Chief Executive Officer, Treasurer
??
1
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