UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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X Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended December 31, 1995
Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to
Commission file number 0-16152
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Holometrix, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
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Delaware 04-2891557
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
25 Wiggins Avenue, Bedford, Massachusetts 01730-2323
(Address of Principal Executive Offices)
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(617) 275-3300
(Issuers Telephone Number, Including Area Code)
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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 No X
As of December 31, 1995, 16,296,878 shares of Common Stock were
outstanding.
Transitional Small Business Disclosure Format:
Yes No X
FORM 10-QSB
QUARTERLY REPORT
TABLE OF CONTENTS
Facing Page . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . .1
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
PART I. FINANCIAL INFORMATION (*)
Item 1. Condensed Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . .3
Statements of Loss . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows. . . . . . . . . . . . . . . . . . . . .6
Notes to Condensed Financial Statements. . . . . . . . . . . . ..7
Item 2. Management's Discussion and Analysis or Plan of Operations . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . .... .11
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . 11
Item 3. Defaults upon Senior Securities . . . . . . . . . . . ..11
Item 4. Submission of Matters to a Vote of Security Holders .. .11
Item 5. Other Information . . . . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . .11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
(*) The financial information at September 30, 1995 has been taken from
the audited financial statements at that date. All other financial
statements are unaudited.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
HOLOMETRIX, INC.
CONDENSED BALANCE SHEETS
ASSETS
(Unaudited)
December 31, September 30,
1995 1995
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(*)
CURRENT ASSETS:
Cash and cash equivalents $ 48,465 $ 40,707
Accounts receivable, less allowance
for doubtful accounts of $20,000 441,761 407,633
Inventories 222,343 239,238
Other current assets 55,304 15,473
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TOTAL CURRENT ASSETS 767,873 703,051
EQUIPMENT AND FIXTURES - net 325,849 350,146
OTHER ASSETS - net 18,913 20,020
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TOTAL ASSETS $1,112,635 $1,073,217
See notes to condensed financial statements.
(*) Balance sheet at September 30, 1995 has been taken from the audited
financial statements at that date. All other financial statements are
unaudited.
HOLOMETRIX, INC.
CONDENSED BALANCE SHEETS - Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, September 30,
1995 1995
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(*)
CURRENT LIABILITIES:
Notes payable - stockholders $ 120,000 $ 55,000
Notes payable -line of credit 150,000 125,000
Accounts payable 177,950 214,743
Accrued payroll and related expenses 14,168 28,731
Accrued other expenses 114,030 61,589
Due to stockholder 43,544 10,854
Current maturities of
long-term obligations 4,673 4,673
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TOTAL CURRENT LIABILITIES 624,365 500,590
LONG-TERM DEBT, .
Notes payable-stockholders,
less current maturities 55,000 110,000
Long term obligations,
less current maturities 23,429 24,571
TOTAL LIABILITIES 702,794 635,161
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
30,000,000 shares authorized;
issued 20,533,157 205,332 205,332
Additional paid-in capital 2,219,009 2,219,009
Accumulated deficit (1,910,500) (1,882,285)
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513,841 542,056
Less treasury stock (at cost) 104,000 104,000
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TOTAL STOCKHOLDERS'
EQUITY 409,841 438,056
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,112,635 $1,073,217
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See notes to condensed financial statements.
(*) Balance sheet at September 30, 1995 has been taken from the audited
financial statements at that date. All other financial statements
are unaudited.
HOLOMETRIX, INC.
CONDENSED STATEMENTS OF LOSS
(Unaudited)
Three-Month Period Ended December 31,
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1995 1994
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NET REVENUES $492,434 $417,735
COST OF SALES 341,518 296,564
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GROSS PROFIT 150,916 121,171
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SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 138,198 170,072
RESEARCH AND DEVELOPMENT 32,809 47,075
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TOTAL OPERATING EXPENSE 171,007 217,147
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LOSS FROM OPERATIONS (20,091) (95,976)
INTEREST EXPENSE - net (8,124) (8,606)
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NET (LOSS) ( $28,215) ($104,582)
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NET LOSS PER COMMON SHARE: ($0.00) ($0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 16,296,878 14,468,342
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See notes to condensed financial statements.
HOLOMETRIX, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three-Month Period Ended December 31,
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1995 1994
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ($28,215) ($104,582)
Adjustments to reconcile net (loss) to net
cash provided by (used for) operating
activities:
Depreciation and amortization 34,763 35,640
Changes in operating assets and
liabilities:
Accounts receivable (36,151) 87,875
Inventories 16,895 (57,784)
Other current assets (14,919) 5,142
Accounts payable and accrued expenses (1,018) 50,707
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Net cash provided by (used for)
operating activities (28,645) 16,998
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CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment and fixtures additions (9,358) (3,372)
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Net cash used for investing activities (9,358) (3,372)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable - (30,000)
Purchase of treasury stock - (3,000)
Due to stockholders, net 21,903 -
Borrowings under notes payable-line
of credit 25,000 -
Decrease in long-term obligations (1,142) (2,329)
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Net cash provided by (used for)
financing activities 45,761 (35,329)
Net increase (decrease) in cash and cash
equivalents 7,758 (21,703)
Cash and cash equivalents, beginning
of period 40,707 108,503
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Cash and cash equivalents, end of period $ 48,465 $ 86,800
Supplemental disclosure of non-cash transactions:
- -------------------------------------------------
During the first quarter of fiscal year 1995, the Company converted its
outstanding Redeemable Preferred Stock Series A, Preferred Stock
Series B, and certain outstanding debt and accrued interest into an aggregate
of 5,901,950 shares of the Company's Common stock.
See notes to condensed financial statements.
HOLOMETRIX, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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.
Accordingly, they do not include all information and footnotes required
by generally accepted accounting principles for complete financial
statement presentation. For further information refer to the financial
statements and notes thereto included in the Company's Annual Report on
Form 10-KSB for the year ended September 30, 1995.
The results of operations for the three month period reported are not
necessarily indicative of those that may be expected for the full year.
The accompanying financial information is unaudited; however, in the
opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary to a fair presentation of the operating
results of the period have been included.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month Period Ended December 31, 1995 as Compared With
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the Three-Month Period Ended December 31, 1994
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Revenues in the first quarter of fiscal 1996 totaled $492,000 as compared
to $418,000 in the comparable quarter of 1995, an increase of $74,000.
Management believes this 18% increase in revenues is directly related to
its efforts in marketing, and focus on sales leads generation.
Cost of sales increased by $45,000, from $297,000 (71% of sales) in the
first quarter of fiscal 1995 to $342,000 (70% of sales) in the same
period of fiscal 1996. The main reason for the increase in cost of sales
was the increase in sales volume. The percent of sales decrease from 71%
to 70% was primarily due to fixed overhead costs being spread over higher
total sales. To further reduce costs, management recently reduced the
workforce. The effect of the work force reduction will be realized in
the second quarter and beyond.
Selling, general and administrative expenses decreased by $32,000, or
19%, from $170,000 (41% of sales) to $138,000 (28% of sales).
The difference was primarily the result of sharing the Company's facility
and certain allocated overhead expenses with Tytronics Incorporated
("Tytronics"), a related entity which owns 54% of the Company's common stock.
In addition, certain one-time expenses associated with Tytronics' purchase
of the majority of Holometrix' stock during the first quarter of fiscal 1995
were not present.
Research and development decreased $14,000, from $47,000 (11% of sales) to
$33,000 (7% of sales). The decrease was due primarily to the sharing of
certain allocated overhead expenses with Tytronics. Management anticipates
that expenses in this area will remain relatively stable. The research and
development expenses decreased as a percentage of sales in the first
quarter of fiscal 1996 because total sales were higher as compared to the
prior year period.
Loss from operations was $20,000 in the first quarter of fiscal 1996,
compared with loss of $96,000 in the comparable period of fiscal 1995,
primarily due to higher revenues and lower operating expenses during the
quarter. Net loss was $28,000 in the first quarter of fiscal 1996,
compared with loss of $105,000 in the comparable period of fiscal 1995,
again due primarily to the higher revenues and lower operating expenses
during the quarter.
Total Assets increased by $39,000 during the first quarter, from
$1,074,000 to $1,113,000. Cash increased by $8,000, and accounts
receivable increased by $36,000, due to higher sales volume. Inventories
decreased by $17,000, due to improved manufacturing planning. Other
current assets increased by $40,000, due primarily to the increase in
receivables from Tytronics for shared facility and overhead expenses
totaling $17,000, and prepaid expenses totaling $15,000. Fixed assets
decreased by $24,000, due primarily to depreciation and amortization.
Total Liabilities increased by $68,000, primarily due to increases in
the Company's line of credit, accrued other expenses, and moneys due to
Tytronics, all offset by a substantial reduction in accounts payable. At
December 31, 1995, the Company was in default on its current $55,000 loan
payment to Tytronics. Tytronics has expressed its agreement not to
accelerate its loan to the Company ($165,000) through September 30, 1996.
The Company's line of credit increased by $25,000 due to increased
borrowings. Accounts payable decreased by $37,000, from $215,000 at
September 30, 1995, to $178,000 at December 31, 1995, primarily due to
payment of extended payables held at September 30, 1995 to conserve cash.
Accrued other expenses increased by $52,000, mainly due to $38,000 of
commissions to international distributors. Moneys due to a stockholder
("Tytronics") increased due to slow payments on the part of the Company,
and an increased volume of inter-company transactions.
As of December 31, 1995, the Company had an outstanding order backlog for
products and services of approximately $118,000 as compared to a backlog of
$277,000 as of December 31, 1994. The Company believes the $118,000 backlog
will be realized in fiscal 1996. The backlog was reduced due to lower than
normal bookings partly due to the government contract noted below.
Management believes that this current backlog amount is only marginally
adequate to maintain stable Company operations.
In the fourth quarter of fiscal 1995, the Company received notification
from the United States Government that a large contract was being suspended,
at least temporarily. Approximately $483,600, or 23% of total sales in
fiscal year 1995 represented revenues under this contract. This contract is
terminable at will by the U.S. government. Due to changes in government
appropriations, government funding levels, and spending priorities, this
contract has been suspended effective September 30, 1995. Reinstatement, if
it occurs, will be determined by the funding and direction of the fiscal
1996 Congressional budget and DOE executive decisions. Ultimately, this
contract could be substantially reduced or canceled. The loss of this
contract will have a material effect on the Company, reducing both sales
and profitability.
The Company expects that it will continue to explore additional business
opportunities through enhanced sales and marketing efforts, new product
development, and the development of strategic relationships, including
licensing, acquisition, or merger. However, there can be no guarantee that
such activities will result in continuing and sustained profitability.
In an effort to increase its marketing efforts, on November 10, 1995, the
Company hired a new Director of Sales, Marketing and Engineering. If the
Company's new marketing efforts meet with success, the Company's management
believes that increased revenues combined with the reduction in expenses
could result in a return to profitability before the end of fiscal 1996.
Under these conditions, management believes that operating capital and the
line of credit from Silicon Valley Bank will provide sufficient capital to
maintain stable Company operations throughout fiscal 1996. Management also
believes that additional capital resources will be available from Tytronics.
However, there can be no assurance that the Company will become profitable
in fiscal 1996, that adequate operating funds will be generated through
revenue increases or expense containment, or that additional funding can be
obtained on acceptable terms.
LIQUIDITY AND CAPITAL RESOURCES
Note payable to a founder
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In April 1992, the Company issued a $50,000 Unsecured Promissory Note to
a founder of the Company. Terms of the note required principal repayment
of $25,000 plus accrued interest at 6% on April 1, 1993 and April 1, 1994.
In August 1994, the terms of the note, with outstanding debt at $44,000,
were re-negotiated. The new agreement calls for 68 monthly payments of
$500 each, including interest at 6%, forgives $5,000 principal immediately,
and forgives an additional $5,000 at the end of the payment schedule if all
payments are made on time. At December 31, 1995, the outstanding balance
was $28,102, of which $23,429 is classified as a long-term liability, and
$4,673 is classified as a current liability.
Notes payable to stockholders
- -----------------------------
A $10,000 loan was advanced by Tytronics to the Company during the first
quarter of fiscal 1996. The Company is currently in default on the current
$55,000 installment payment due on the term note to Tytronics. However,
Tytronics has expressed its agreement not to accelerate payment on the
term note. At December 31, 1995, the total outstanding balance was
$175,000, of which $120,000 is classified as current.
Notes payable line of credit
- ----------------------------
On December 22, 1994, Silicon Valley Bank provided the Company with a line
of credit in the amount of $350,000. This line of credit is secured by
substantially all assets of the Company. Advances under this line shall
not exceed 70% of the Company's eligible accounts receivable as defined.
These amounts are payable on demand and bear interest at the bank's prime
rate plus 1.5%. Advances are also contingent upon maintaining certain
covenants relative to profitability, liquidity, tangible net worth, and
leverage. The Company was not in compliance with certain of these
covenants during part of the 1995 fiscal year. Subject to the terms and
conditions of a modification agreement dated August 14, 1995, the bank
has waived the covenant violations and amended the requirements for
these covenants. As of December 31, 1995, the Company was in compliance
with all covenants; borrowings under the line of credit were $150,000.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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The Company was not involved in any legal proceedings as of the date
of this report.
Item 2. Changes in Securities
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Not applicable.
Item 3. Defaults Upon Senior Securities
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Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of security holders, whether
through the solicitation of proxies or otherwise, during the quarter
ended December 31, 1994.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
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Not applicable.
(b) Reports on Form 8-K
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Not applicable.
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Holometrix, Inc.
By: /s/ John E. Wolfe
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John E. Wolfe
President
Date: February 13, 1996
