SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A No. 1
x Annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended September 30, 1996
(Fee Required)
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
(No Fee Required)
Commission file number 0-16152
Holometrix, Inc.
(Exact Name of Registrant as specified in its Charter)
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) (Zip Code)
(617) 275-3300
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None Not applicable
Securities Registered Pursuant to Section 12(g) of the Act:
Title of class
Common Stock, $.01 par Value
Check 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 other 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
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. x
Registrant's income for the fiscal year ended September 30, 1996 was
$4,041. The aggregate market value of shares of the Common Stock held
by non-affiliates, based upon the average of the bid and ask prices
for such stock on December 15, 1996 was approximately $20,660. As of
December 15, 1996, 22,296,878 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format Yes No x
PART I
ITEM 1. BUSINESS
Holometrix, Inc. (the "Company") is a product development,
manufacturing and contract test services company which specializes
in manufacturing instruments and providing contract test services
for measuring the thermophysical properties of a wide variety of
materials. The Company's Instruments Division currently designs,
manufactures and distributes five product lines, containing
sixteen models, which measure thermophysical (temperature)
properties. The Company's Testing Services Division provides
contract test and engineering services to evaluate a number of
temperature-related performance factors of virtually any material.
The Testing Services Division also performs mechanical and
physical properties testing. The Company's principal offices are
located at 25 Wiggins Avenue, Bedford, Massachusetts 01730-2323;
its telephone number is (781) 275-3300 and its facsimile number is
(781) 275-3705. The Company is a Delaware corporation which was
incorporated on October 23, 1985.
Holometrix Instruments Division
The Company engages in the development, production and
distribution of instruments under the tradename "Thermatest". The
Instruments Division currently designs, manufactures and markets
instruments that measure the thermophysical properties of a broad
range of materials for research, product development and quality-
control applications. Information about thermophysical properties
is used to quantify the performance, quality, and/or composition
of various materials such as insulation, composites, plastics, and
ceramics. In addition to their importance in advanced materials
development, the Company's instruments are used as research tools
to address worldwide environmental issues, including energy
conservation, plastics recycling and nuclear waste disposal.
Holometrix has over 30 years of experience in thermophysical
(temperature) properties testing. The basic technology underlying
the Company's Thermatest instruments is the application of heat
energy to a material under test and the measurement of the results
of such an application. The precise measurements and the
containment of heat, combined with equally precise temperature
measurement and control, are key elements in the design of nearly
all of the Division's products. Many instruments encompass
microprocessor-controlled data collection and analysis, resulting
in the fully automated calculation of material properties, such as
thermal conductivity and specific heat. The nature of heat
transfer through a material, resulting from the application of
energy, varies depending on the material's type and composition.
Therefore, a different methodology is required to test different
types of material. The Company manufactures various instruments
incorporating these different methodologies.
The five Thermatest product lines consist of sixteen instrument
models, plus Holometrix' proprietary Q-Lab automation software.
Ongoing development efforts have resulted in new instrument
products that are fully automated, incorporating either PC
interface, or internal microprocessors. Revenues are also derived
from service and spare parts. No single instrument manufactured
by the Holometrix Instruments Division currently accounts for more
than 25% of total revenues.
Holometrix Products
Heat Flow Meters (Lambda 2000 Series, Rapid-k VT-400)
The Heat Flow Meter technique is an easy and rapid method for
testing the thermal conductivity and thermal resistance (R-
value) of insulation. This type of instrument is widely used
in both the quality control testing and the development of
insulation products. Industry-wide acceptance of this
technique as a reliable and accurate procedure has made it
the most commonly used test method for both research and
development and quality control applications. Federal trade
rules require insulation manufacturers to measure the thermal
resistance (R Value) by the heat flow meter method, or
similar techniques, as part of the procedure for labeling
their products. Cellular foam insulation manufacturers, who
are required to eliminate ozone depleting chlorinated
fluorocarbons from their products, use these instruments to
evaluate the effectiveness of replacement blowing agents. In
1996 Holometrix introduced the new Lambda 2000 Series of heat
flow meter products. These instruments contain an advanced
instrumentation and control concept for which a patent is
pending.
Guarded Heat Flow Meters (TCA-200, TCA-200-LT and TCA-300)
The Guarded Heat Flow meter method permits the testing of
moderate conductivity materials. Customers use these
instruments to establish safe operating temperatures and
thermal efficiency of products ranging from electronic and
semiconductor components to adhesives, and for heat transfer
modeling of many industrial processes, including injection
molding of polymers. Thermal conductivity data from these
instruments is important to the plastics, electronics,
automotive, aerospace and food processing industries. The
instruments can test solid and thin film materials and
special test cells are available for testing polymers and
highly viscous fluids through the melt. Test materials
include rubber, plastic, composites, epoxy, ceramics, paper
products, greases and pastes.
Guarded Hot Plates (GBP-200, GBP-300, GBP-450 and GBP-600)
These instruments are used primarily as research tools to
measure thermal conductivity in porous and solid materials
over a wide range of temperatures, environmental conditions
and material types. This technique is used to measure
materials from cryogenic (very cold) to very high
temperatures. The measuring process is reliable, simple and
accurate and requires no pre-test calibration by the user.
Varying degrees of automation are available to meet a range
of budgets and provide for unattended operation.
Comparative Instrument (COM-800)
The comparative technique utilizes known properties of
reference materials to measure heat flow. It is a
convenient, flexible system which measures the thermal
conductivity of a variety of solid materials over a broad
range of temperatures and environmental conditions.
Materials which can be tested include ceramics, composites,
metals, metal alloys, filled plastics and epoxies, geological
materials, and carbon products. A special sample holder is
also available for testing liquids and pastes.
Laserflash Instruments (Thermaflash 2200, 1100 and
Microflash, 300)
These instruments utilize a sophisticated, high-performance
Laser Flash Thermal Diffusivity (speed of heat through
material) (LFTD) technique to measure both thermal
diffusivity and specific heat from -170 C to 2000 C. Test
samples are illuminated uniformly on one surface by a laser
beam pulse, and the temperature rise of the opposite surface
is measured and used to calculate thermal diffusivity. Data
from these instruments are used by customers to determine
safe operating temperatures, quality assurance, design and
process control for composition, molding, heating or cooling
rates, and thermal performance analysis. The laserflash
technique not only provides important information on
transient heat flow, but also allows testing of small samples
at high temperatures. Typical test materials include
ceramics, coatings, composites, polymers, metals and alloys.
The Thermaflash 2200 and 1100 operate up to 2000 C and
1100 C, respectively. The Microflash, is used for
applications with a lower temperature requirement and for
customers with limited capital equipment budgets. Typical
applications include the characterization of materials for
electronic and semiconductor material design and
manufacturing.
Holometrix Testing Services Division
The Testing Services Division maintains a thermophysics
laboratory, which provides contract test and engineering services
to evaluate various temperature-related performance factors of
virtually any material. Testing is generally performed to ASTM
(American Society of Testing and Materials) standards. In
addition, insulation testing is provided under NVLAP
accreditation. NVLAP (the National Voluntary Laboratory
Accreditation Program) is supported by the National Institute of
Standards and Technology. The Division also demonstrates the
capabilities of Thermatest instruments to potential customers,
provides significant input to outside technology steering groups
which establish the standards for industry instrument utilization,
and provides valuable technical and marketing input for product
development. The Division's experience and capabilities cover a
broad scope of temperature range, environmental conditions, sample
size and property magnitude.
The Division's testing capabilities complement customer research
and product development activities. Thermophysical testing of
materials is not a routine capability and competence for most
material development departments. Thus, testing service customers
tend to be repeat customers who use the Division as a complement
to their capabilities.
In addition to thermophysical testing of materials, the Division
also offers selected mechanical and moisture testing of materials.
The Division also maintains the capability to test entire wall
sections built to specification in support of the building and
construction industry. This type of testing helps evaluate the
performance, under simulated environmental conditions, of advanced
construction techniques, and new insulating and moisture barrier
materials.
The end result of most Division projects is a technical report,
usually containing experimental data resulting from work carried
out in a laboratory setting. Projects lacking a large engineering
component are termed standard testing programs when the work can
be performed on existing equipment using established techniques.
Non-standard testing programs (in some cases more appropriately
termed engineering development programs) differ in that they may
involve the creation of a special apparatus, modification of
existing equipment, or development of new procedures. The
majority of programs conducted in the Division are standard
testing programs.
Research and development programs, on the other hand, go beyond
the generation of data to analyze results, draw conclusions and
make recommendations. Alternately, they may involve literature
searches, material assessments, engineering studies or special
instrument design. These programs are generally higher value and
run longer than testing programs. As an example, Holometrix has
provided testing services to the Department of Energy (DOE) for a
number of years for the purpose of evaluating the thermal
characteristics of Yucca Mountain, a proposed nuclear waste
repository.
Holometrix' Markets
Holometrix' thermophysical instruments are sold primarily to
materials laboratories engaged in the development and testing of
insulations, building materials, advanced engineered materials,
plastics and packaging manufacturers, aerospace manufacturers and
government laboratories. A number of instruments are also sold to
insulation manufacturing facilities. Management believes (based
on its internal calculations of the sales of companies that it has
identified as competitors) that current markets for thermal
conductivity instruments and testing services total approximately
$10 - $15 million annually. The Company has identified engineered
materials, electronics and specialty plastics industries as
promising markets for the instruments. The Company markets its
products and services in the U.S. and internationally through the
combination of a direct sales force and a network of independent
distributors and sales agents. The Company actively advertises its
products in industry trade journals and also attends various U.S.
and international trade shows to promote its products and
services.
Current products and test services are sold in North America
directly from the Company's offices in Bedford, Massachusetts.
Domestic sales amounted to 71% of total revenue for fiscal year
1996. Domestic sales and marketing are handled in-house by a
staff of two professionals and an administrator. Overseas sales
(primarily to Europe and the Far East) are made through
independent distributors and sales agents. In addition to the
internal sales force, testing services are sold by individual
project managers responsible for specific testing areas. Product
visibility is maintained through active participation in national
and international trade organizations, including the American
Society of Testing and Materials (ASTM). Additional visibility is
maintained through advertising, exhibitions, informational
mailings, technical application notes and customer demonstrations.
In fiscal 1996, overseas sales accounted for approximately 29% of
total sales, compared to 32% in fiscal 1995.
In order to expand its market presence and build revenue, the
Company is exploring a variety of alternatives, falling into four
primary categories:
1.) Enhanced Marketing and Sales Efforts. The Company is
investing additional resources, including new personnel, to
expand its worldwide marketing and selling effectiveness.
Specific examples include improved sales and marketing
materials, broader trade show and symposium participation,
and expanded geographic coverage.
2.) Product Development. The Company is continuing to invest in
the development of new products, and in upgrading its
existing products to have more competitive features, be
easier to manufacture, and have improved margins.
3.) Corporate Synergy. Holometrix, Nametre and Tytronics
Incorporated (majority owner of Holometrix) serve many common
markets and customers including the polymer, petrochemical,
paints and coatings, and food markets. Complementary
marketing and distribution activities have begun.
4.) Strategic Relationships. These include companies and/or
product lines which the Company might acquire, companies that
might have an interest in licensing technology to the
Company, and companies that might have an interest in
investing in the Company.
Holometrix Patents and Proprietary Technology
The Company develops proprietary information and technology,
including software programs, in the course of its research and
development activities. Management believes that patent and
copyright protection are important, but less significant than the
technical competence and creative skills of the Company's
personnel, the performance and reliability of the Company's
products and competitive marketing, pricing and customer service.
The Company has filed for a patent which describes the unique
control of its new Lambda 2000 Series heat flow meter product
line. No determination has been made to date by the US Patent
Office as to the validity of this application.
The Company owns eight trademarks. Three of the trademarks are
registered, and the registrations expire in various years through
1998. These three trademarks are for the R-Matic, k-Matic, and C-
Matic (currently called the TCA) instruments. The Company does
not believe these trademarks are material to the conduct of the
business.
Holometrix Customers
During fiscal 1996, the Company had total revenues of
approximately $2,201,000, compared to $2,105,000 in fiscal 1995.
No customer accounted for more than 10% of sales in fiscal 1996.
Holometrix Backlog
As of September 30, 1996, the Company's backlog for products and
services totaled $333,000, as compared to $244,000 in backlog as
of September 30, 1995. The fiscal 1996 backlog consisted of
$202,000 for the Instruments Division and $131,000 for the Testing
Services Division. All backlog at September 30, 1996 is expected
to be delivered before September 30, 1997.
Holometrix Competition
The Company's competitive advantage lies in its ability to develop
and produce a broad spectrum of products in several different
market niches. The Company's Instruments Division experiences
direct competition for its heat flow meters from Anter Corporation
and LaserComp Inc. Thermaflash has strong competition from Sinku
Riko in the Far East, Netzsch GmbH, Theta Industries and Anter
Inc. in Europe and North America. Competitive factors include
product performance, quality and reliability, ease of use,
marketing capability, service and support, and name recognition.
Management believes the Company competes favorably in each of
these areas. The Company can give no assurance that its current
products will remain competitive in these areas or that its future
products will be competitive in these areas.
The market for scientific measuring instrumentation is also
characterized by extensive research and development and rapid
technological change. Development by others of new or improved
products or technologies may make the Company's products or
proposed products obsolete or less competitive. The Company may
be required to devote substantial efforts and financial resources
to increase its existing product lines by developing new products
and services.
The Testing Services Division competes as a broad-capability
independent laboratory performing thermal property studies. There
are no other known companies or laboratories that encompass the
Division's entire capabilities. However, many laboratories offer
a subset of the Division's services. Competitive contracts are
awarded based on price, testing capability and credibility of the
test results. The following sample laboratories compete in the
market sectors indicated: Engineered Materials - Thermophysical
Properties Research Laboratory Inc., Anter Laboratories, Inc., The
Edward Orton Jr. Ceramic Foundation, Southern Research Institute,
and Virginia Polytechnic Institute; Insulations - Southern
Research Institute, Sparrell Engineering Research Corporation, and
The Center for Applied Engineering; Government - Oak Ridge
National Laboratory and National Institute of Standards and
Technology.
Holometrix Research and Development
The Company expended approximately $154,000, or 7% of sales and
$207,000 or 10% of sales in fiscal 1996 and fiscal 1995,
respectively, on research and development. The Company expects
that in fiscal 1997 its research and development expenditures will
remain close to 7% of sales.
Governmental Regulations
There is presently no material government regulation with respect
to the Company's businesses and its development of products.
However, the extent to which future governmental regulations may
regulate the Company's activities cannot be predicted, and the
Company may be subject to restrictions on allowable costs and
profits on U.S. government contracts and the export of the
technology to other countries as it seeks to expand further into
foreign markets.
Holometrix Employees
As of September 30, 1996, the Company had 24 employees, 16 of whom
are employed full-time. Most of the Company's employees are
highly skilled and the Company's continued success will depend, in
part, upon its ability to attract and retain such skilled
employees. The Company has never experienced a work stoppage,
none of its employees are represented by a labor organization, and
the Company considers its relations with its employees to be good.
Holometrix Description of Properties
The Company occupies approximately 15,200 square feet of
production, research and development, engineering, administrative
and service facilities at 25 Wiggins Avenue in Bedford,
Massachusetts. The Company occupies this facility under a lease
which expires September 30, 1999. Approximately 30% of this space
is sublet to Tytronics Incorporated, majority owner of Holometrix.
The Company's rental expense for fiscal 1996 was $65,355,
excluding rental income of $30,801 from Tytronics Incorporated.
The Company considers these facilities to be reasonably insured
and adequate for its foreseeable needs and believes that similar
facilities are available in the Boston metropolitan area at
comparable rental rates.
Substantially all of the machinery and equipment used by the
Company in its operations is owned by the Company and management
considers this equipment to be in good condition. All of the
machinery and equipment owned by the Company is subject to a
security interest in favor of Tytronics Incorporated and is
subject to a senior security interest in favor of Silicon Valley
Bank, to which Tytronics' interest is subordinated.
Legal Proceedings
There are no material pending legal proceedings to which the
Company is a party or to which any of its properties is subject.
BUSINESS OF NATIONAL METAL REFINING COMPANY
In 1996, the Company purchased a majority of the issued and
outstanding capital stock of National Metal Refining Company
("Nametre"). Nametre is a product development and manufacturing
company that specializes in manufacturing in-line and laboratory
viscosity analyzers. These analyzers are used to measure the
viscosity (thickness and density) and viscoelasticity (pliability)
of a wide range of material and are sold into the polymer
manufacturing, petrochemical, food, paints and coatings and pulp
and paper markets. Nametre is a New Jersey corporation which was
organized in 1956. Nametre is located at 101 Liberty Street,
Metuchen, NJ 08840; its telephone number is (908) 494-2422 and its
facsimile number is (908) 494-8916.
Nametre Products
Nametre engages in the development, production and distribution of
viscosity analyzers under the trade names, "Viscoliner " and
"Rheoliner ". The analyzers measure the viscosity and
viscoelasticity of a wide range of materials. Products are
developed and manufactured for both on-line process monitoring and
control, and laboratory use. The vast majority of analyzers sold
are for in-line process control. Such analyzers are used to
provide manufacturers with viscosity information, which is often
critical to ensuring proper material formulation and material
production. Applications and markets that routinely use viscosity
analyzers include the polymer, petrochemical, food, paints and
coatings, and pulp and paper industries.
Nametre has over thirty years experience in the viscosity
measurement business. The basic technology underlying the Nametre
analyzers is the use of an oscillating sensor that is inserted
into a stream of material in a process line (pipe or vessel). The
sensor oscillates at a constant amplitude. The viscosity of a
product is then determined on the basis of the electrical power
needed to maintain the oscillation amplitude in the presence of
the viscous material. The principles of measurement of the
Viscoliner product are currently covered by U.S. patents.
The Viscoliner product line consists of three different models:
the 1810 for in-line process monitoring and control, the 300 for
paints and coatings and the 1710 for laboratory analysis. The
1810 is an on-line viscometer that is applicable to a wide range
of materials and applications. It is microprocessor controlled.
The model 1810 is typically utilized in the polymer market.
Ongoing developments include PC based software, "Viscontrol" for
analyzer control, data acquisition and interface to factory
control systems.
The Viscoliner model 300 is also an on-line analyzer. It is
similar to the model 1810 in its concept of operation; however, it
is configured primarily for paint, ink and coatings applications.
The Viscoliner model 1710 is a laboratory version of the model
1810. This instrument is used primarily for research, product
development and quality assurance. Applications include the full
range of markets that Nametre serves.
Nametre's Markets
Nametre's analyzers are sold primarily to product and material
manufacturers engaged in the production and use of plastics,
chemical, foods, paints, inks or coatings and paper and pulp. A
number of analyzers are also sold to government laboratories and
universities. Management believes (based on its internal
calculations of the sales of companies that it has identified as
competitors) that the current market for process viscosity totals
approximately $20-25 million annually.
Nametre Patents and Proprietary Technology
Nametre develops proprietary information and technology, including
software programs, in the course of its research and development
activities. Certain aspects of its product are patented; however,
management believes that patent and copyright protection are
important, but less significant than the technical competence and
creative skills of Nametre's personnel, the performance and
reliability of Nametre's products, and competitive marketing,
pricing and customer service.
Nametre owns nine patents, including patents that cover the basic
transducer and electronics for viscosity measurement, the method
and apparatus for viscoelastic measurements, and the transducer
for high viscosity measurements in extruders. The patents expire
in various years from 1998 to 2011.
Nametre owns or has applied for four trademarks. Three trademarks
are Viscoliner , Rheoliner , and the Nametre's logo, Absolute Eta
in a circle. These trademarks expire in various years, from 1999
to 2005. Nametre has also applied for a trademark on VisControl.
Nametre Customers
On September 30, 1996, the Company acquired approximately 61.23%
of the outstanding shares of Nametre. The consolidated statements
of operations and cash flows of Holometrix and subsidiary exclude
any activity of Nametre prior to the date of acquisition. During
fiscal 1996, which was a nine month year to allow Nametre to
change its fiscal year to coincide with the Company's fiscal year,
Nametre had total revenues of approximately $1,776,000, compared
to $2,671,000 for the 12 month year ended December 31, 1995. For
comparison purposes, for the period January 1 to September 30,
1995 Nametre had total revenues of $1,888,000. No customer
accounted for more than 10% of Nametre's sales in fiscal 1996.
Nametre Backlog
As of September 30, 1996, Nametre's backlog for products and
services totaled $342,513, as compared to $856,665 as of September
30, 1995. All backlog at September 30, 1996 is expected to be
delivered before September 30, 1997.
Nametre Competition
Nametre's competitive advantage lies in its ability to develop and
produce custom transducers, covering a wide range of viscosities,
designed for mounting directly into the customer's process.
Nametre's major competitors are Brookfield Engineering
Laboratories, Solatron Transducers, MicroMotion Division of Fisher
Rosemount, Norcross Corporation and Dynatrol Division of
Automation Products, Inc. Competitive factors include price, wide
product lines, performance, quality and reliability, ease of use,
marketing capability, service and support and name recognition.
Management believes Nametre competes favorably in most of these
areas. Price and wide product line competition is generally
overcome by the instruments' performance and installed cost.
The market for scientific measuring instrumentation is also
characterized by extensive research and development and rapid
technological change. Development by others of new or improved
products or technologies may make Nametre's products or proposed
products obsolete or less competitive. Nametre may be required to
devote substantial efforts and financial resources to increase its
existing product lines by developing new products and services.
Nametre Research and Development
Nametre expended approximately $299,131, or 17% of sales and
$210,295, or 8% of sales in fiscal 1996 and fiscal 1995,
respectively, on research and development. Nametre expects that
in fiscal 1997 its research and development expenditures will
decrease to 10% of sales.
Governmental Regulations
There is presently no material government regulation with respect
to Nametre's businesses and its development of products. However,
the extent to which future governmental regulations may regulate
Nametre's activities cannot be predicted, and Nametre may be
subject to restrictions on allowable costs and profits on U.S.
government contracts and the export of the technology to other
countries as it seeks to expand further into foreign markets.
Nametre Employees
As of September 30, 1996, Nametre had 15 employees, 14 of whom are
employed full-time. Most of Nametre's employees are highly
skilled and Nametre's continued success will depend, in part, upon
its ability to attract and retain such skilled employees. Nametre
has never experienced a work stoppage, none of its employees are
represented by a labor organization, and Nametre considers its
relations with its employees to be good.
Nametre Description of Properties
Nametre leases approximately 4,000 square feet of production,
research and development, engineering, administrative and service
facilities at 101 Liberty Street, Metuchen, New Jersey. Nametre
occupies this facility on a month to month basis under an
operating lease.
Nametre considers these facilities to be reasonably insured and
adequate for its foreseeable needs and believes that similar
facilities are available in the immediate area at comparable
rental rates. As of July 28, 1997, all of the machinery and
equipment owned by Nametre was subject to a senior security
interest in favor of Silicon Valley Bank.
Legal Proceedings
There are no material pending legal proceedings to which Nametre
is a party or to which any of its properties is subject.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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:
HOLOMETRIX, INC.
By: /s/John E. Wolfe DATE: November 25, 1996
John E. Wolfe, President and Treasurer
(principal executive, financial
and accounting officer)
