UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended December 31, 1996
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
Holometrix, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 04-2891557
(State or Other Jurisdiction of (I.R.S. Employer
ncorporation or Organization) Identification Number)
25 Wiggins Avenue, Bedford, Massachusetts 01730-2323
(Address of Principal Executive Offices)
(617) 275-3300
(Issuer's Telephone Number, Including Area Code)
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
As of December 31, 1996, 22,296,878 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 Consolidated Financial Statements
Balance Sheets . . . . . . . . . .. . . . . . . . . 3
Statements of Loss . . . . . . . . . . . . .. . . . 5
Statements of Cash Flows.. . . . . . . . . . . . . 6
Notes to Condensed Consolidated 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, 1996 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. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
December 31, September 30,
1996 1996
(*)
CURRENT ASSETS:
Cash and cash equivalents $16,956 $ 27,495
Accounts receivable, less allowance
for doubtful accounts of $35,000 1,031,665 1,162,148
Inventories 716,021 662,323
Other current assets 15,481 32,802
TOTAL CURRENT ASSETS 1,780,123 1,884,768
EQUIPMENT AND FIXTURES - net 330,618 351,656
OTHER ASSETS - net 308,091 312,299
TOTAL ASSETS $2,418,832 $2,548,723
See notes to condensed consolidated financial statements.
(*)Balance sheet at September 30, 1996 has been taken from the
audited financial statements at that date. All other financial
statements are unaudited.
HOLOMETRIX, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, September 30,
1996 1996
(*)
CURRENT LIABILITIES:
Notes payable - stockholders $ 50,000 $ 20,000
Notes payable -line of credit 159,000 84,000
Accounts payable 1,102,865 1,204,028
Accrued payroll and related
expenses 29,804 37,086
Accrued other expenses 97,782 59,135
Due to stockholder 8,709 77,204
Current maturities of
long-term obligations 103,796 105,000
TOTAL CURRENT LIABILITIES 1,551,956 1,586,453
LONG-TERM DEBT
Notes payable-stockholders,
less current maturities 50,000 100,000
Long term obligations, less
current maturities 88,539 113,539
TOTAL LIABILITIES 1,690,495 1,799,992
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY 70,242 66,634
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
30,000,000 shares authorized;
issued 26,533,157 265,332 265,332
Additional paid-in capital 2,459,009 2,459,009
Accumulated deficit (1,912,246) (1,878,244)
812,095 846,097
Less: Treasury stock (at cost) 104,000 104,000
Subscriptions Receivable 50,000 60,000
TOTAL STOCKHOLDERS'
EQUITY 658,095 682,097
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,418,832 $2,548,723
See notes to condensed consolidated financial statements.
(*)Balance sheet at September 30, 1996 has been taken from the
audited financial statements at that date. All other financial
statements are unaudited.
HOLOMETRIX, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Unaudited)
Three-Month Period Ended December 31,
1996 1995
NET REVENUES $1,082,622 $492,434
COST OF SALES 568,539 341,518
GROSS PROFIT 514,083 150,916
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 463,272 138,198
RESEARCH AND DEVELOPMENT 74,965 32,809
TOTAL OPERATING EXPENSE 538,237 171,007
LOSS FROM OPERATIONS (24,154) (20,091)
INTEREST EXPENSE - net (6,237) (8,124)
LOSS BEFORE MINORITY INTEREST (30,391) (28,215)
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARY (3,611) -
NET LOSS ( $34,002) ( $28,215)
NET LOSS PER COMMON SHARE: ($0.00) ($0.00)
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 22,296,878 16,296,878
See notes to condensed consolidated financial statements.
HOLOMETRIX, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three-Month Period Ended December 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) ($34,002) ($28,215)
Adjustments to reconcile net (loss) to net
cash provided by (used for) operating
activities:
Depreciation and amortization 36,430 34,763
Minority interest 3,611 -
Changes in operating assets and liabilities:
Accounts receivable 130,483 (36,151)
Inventories (53,698) 16,895
Other current assets 14,621 (14,919)
Accounts payable and accrued expenses (69,798) (1,018)
Net cash provided by (used for) operating
activities 27,647 (28,645)
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment and fixtures additions (8,487) (9,358)
Net cash used for investing activities (8,487) (9,358)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (20,000) -
Due to stockholders, net (68,495) 21,903
Subscription receivable payments 10,000 -
Borrowings under notes payable-line
of credit 75,000 25,000
Decrease in long-term obligations (26,204) (1,142)
Net cash provided by (used for)
financing activities (29,699) 45,761
Net increase (decrease) in cash and cash
equivalents (10,539) 7,758
Cash and cash equivalents, beginning of
period 27,495 40,707
Cash and cash equivalents, end of period $ 16,956 $ 48,465
Supplemental disclosure of non-cash transactions:
See notes to condensed consolidated financial statements.
HOLOMETRIX, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited 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 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, 1996.
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, 1996 as Compared With
the Three-Month Period Ended December 31, 1995
Revenues in the first quarter of fiscal 1997 totaled
$1,083,000 as compared to $492,000 in the comparable quarter of
1996, an increase of $591,000. This 120% increase is primarily
due to the acquisition of a majority ownership in National Metal
Refining Company, Inc., ("Nametre") during fiscal year 1996. The
revenues for Nametre alone totaled $576,000 and Revenues for
Holometrix alone totaled $506,000, a 3% increase over the
comparable quarter of fiscal 1996.
Cost of sales increased by $227,000, or 66%, from $342,000
(70% of sales) in the first quarter of fiscal 1996 to $569,000
(53% of sales) in the same period of fiscal 1997. This 66%
increase is attributable primarily to the Nametre acquisition.
Cost of sales for Holometrix alone totaled $325,000, a 5%
decrease. Management attributes this to improved operating
efficiencies.
Selling, general and administrative expenses increased by
$325,000, or 236%, from $138,000 (28% of sales) to $463,000 (43%
of sales). The difference was primarily the result of the
acquisition of Nametre. Holometrix expenses alone totaled
$178,000, an increase of 29%. The Holometrix increase was
primarily due to the appointment of a Director of Marketing &
Sales during fiscal year 1996, and increased marketing and sales
activities.
Research and development increased $42,000, from $33,000 (7%
of sales) to $75,000 (7% of sales). The increase was again due to
the acquisition of Nametre. Holometrix R&D alone increased
$3,000, an increase of 9%. This increase was due to the ongoing
introduction of new instrument products.
Loss from operations was $24,000 in the first quarter of
fiscal 1997, compared with a loss of $20,000 in the comparable
period of fiscal 1996. Holometrix' loss from operation alone was
$33,000. Consolidated Net loss was $34,000 in the first quarter
of fiscal 1997. Holometrix net loss alone was $40,000 compared
with a net loss of $28,000 in the comparable period of fiscal
1996. These losses are due to increased selling and
administrative costs, partially offset by improved cost of goods
sold, and income derived from the consolidation of Nametre.
Total Assets decreased by $130,000 (5%) in the first quarter,
from $2,548,723 to $2,418,832. Cash decreased by $11,000, and,
due to increased collections activity, accounts receivable
decreased by $130,000 in the first quarter. Inventories
increased by $54,000, due to manufacturing plans for increased
sales volume. Other assets decreased by $16,000, due primarily to
a $17,000 decrease in prepaid expenses for trade shows and other
items. Equipment and fixtures and fixtures and other assets
decreased by $25,000, due primarily to depreciation and
amortization.
Total Liabilities decreased by $109,000, primarily due to
decreases of $88,000 in notes and other payables to affiliates,
and decreases of $101,000 in accounts payable, offset by an
increase of $75,000 in the Company's line of credit, and
increases of $6,000 in accrued other expenses and long term
obligations. The Company's line of credit increased by $75,000
due to increased borrowings. Accounts payable decreased by
$101,000, from $1,204,000 at September 30, 1996, to $1,103,000 at
December 31, 1996, primarily due to payment of extended payables
present at September 30, 1996 to conserve cash. Accrued other
expenses increased by $31,000, mainly due to commissions for
certain internal sales employees and international distributors.
Long term debt decrreased by $75,000 from $213,000 to $138,000,
$50,000 of that change is due to reclasification of notes payable
as current, and $25,000 for current other obligations.
As of December 31, 1996, the Company had an outstanding order
backlog for products and services of approximately $801,000 as
compared to a backlog of $118,000 at December 31, 1995. The
Company believes the $801,000 backlog will be realized in fiscal
1997. The outstanding backlog for Holometrix alone at December
31, 1996, was approximately $434,000, an increase of $316,000
(268%). Management believes this is due to increased marketing
and sales activities, combined with the introduction of the
Lambda 2000 series of instruments.
LIQUIDITY AND CAPITAL RESOURCES
Acquisition & Debt Conversion
On September 30, 1996, the Company acquired approximately
61.23% of the outstanding shares of Nametre, a developer of
instruments for the measurement of viscous properties of
materials, for $225,000 in cash, and $75,000 in notes payable,
plus acquisition costs. The acquisition has been accounted for
under the purchase method of accounting, resulting in the cost of
the acquisition being preliminarily allocated on the basis of the
estimated fair value of the assets acquired and liabilities
assumed. This allocation has resulted in goodwill of
approximately $245,000 which is being amortized over 15 years.
The purchase also provided for the acquisition by the Company of
warrants to purchase an additional 13,334 shares at $3 per share
and 10,000 shares at $6 per share. The Company raised the funds
to acquire Nametre by issuing 6,000,000 shares of the Company's
common stock to Tytronics, Incorporated ("Tytronics"), at a
purchase price of $.05 per share. At the time of this sale of
shares, the Company entered into a debt restructuring agreement
with Tytronics; in conjunction with that agreement, the Company
also issued warrants to Tytronics to purchase one million, one
hundred thousand (1,100,000) shares of Common Stock at an
exercise price of $0.05 per share and one million (1,000,000)
shares of Common Stock at an exercise price of $0.10 per share,
expiring February 1, 2006. The purchase did not have a material
effect on the Consolidated Statement of Income for the year ended
September 30, 1996.
Notes payable to stockholders
As of December 31, 1995, the Company was in default on the then
current $55,000 installment payment due on the term note to
Tytronics. However, Tytronics had expressed its agreement not to
accelerate payment on this term note. Subsequently, as of
September 30, 1996, in connection with additional common stock
sold to Tytronics, the note was re-written for $100,000 payable
in two installments due in November 1997 and November 1998.
At December 31, 1996, the total outstanding balance was $100,000,
of which $50,000 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 are not permitted to exceed 70% of the
Company's eligible accounts receivable as defined. These
outstanding 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. As of December 31,
1996, the Company was in compliance with all covenants, and
borrowings under the line of credit were $159,000. On December
31, 1996, the Silicon Valley Bank approved the inclusion of the
Nametre accounts receivables, thereby increasing the Company's
borrowing capacity.
In the second half of fiscal 1996 the Company introduced new
instrument products, namely the Lambda 2000 Series. The Company
will continue to invest in enhanced sales and marketing efforts,
new product development, and the development of strategic
relationships, including licensing, acquisition, or mergers. If
the Company's new instrument product line, combined with new
marketing efforts meet with success, the Company's management
believes that increased revenues could result in a return to
profitability before the end of fiscal 1997. 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
1997. 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 1997,
that adequate operating funds will be generated through revenue
increases, that strategic relationships will materialize, or that
additional funding can be obtained on acceptable terms.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company was not involved in any legal proceedings as
of the date of this report.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders,
whether through the solicitation of proxies or otherwise,
during the quarter ended December 31, 1996.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on form 8-K dated October 9,
1996, and amended it on December 16, 1996. This filing
reported the acquisition by the Company, of approximately
61.23% of the issued and outstanding stock of Nametre, and
disclosed the financial statements and pro forma financial
information relative to the acquired business..
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
John E. Wolfe
President
Date: February 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 16,956
<SECURITIES> 0
<RECEIVABLES> 1,066,665
<ALLOWANCES> (35,000)
<INVENTORY> 716,021
<CURRENT-ASSETS> 1,780,123
<PP&E> 1,374,208
<DEPRECIATION> (1,043,590)
<TOTAL-ASSETS> 2,418,832
<CURRENT-LIABILITIES> 1,551,956
<BONDS> 208,781
0
0
<COMMON> 265,332
<OTHER-SE> 392,763
<TOTAL-LIABILITY-AND-EQUITY> 2,418,832
<SALES> 1,082,622
<TOTAL-REVENUES> 1,082,622
<CGS> 568,539
<TOTAL-COSTS> 568,539
<OTHER-EXPENSES> 538,237
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,237)
<INCOME-PRETAX> (30,391)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,611)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (34,002)
<EPS-PRIMARY> ($0.00)
<EPS-DILUTED> ($0.00)
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