UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
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
Incorporation or Organization) Identification
Number)
25 Wiggins Avenue, Bedford, Massachusetts 01730-2323
(Address of Principal Executive Offices)
(617) 275-3300
(Issuers 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 No
As of June 30, 1997, 22,296,878 shares of Common Stock were
outstanding.
Transitional Small Business Disclosure Format:
yes No
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - Holometrix, Inc. (the "Company") is
a product development, manufacturing and contract test
services company which specializes in manufacturing
instruments ("Instruments") and providing contract test
services ("Testing Services") for measuring the
thermophysical properties of a wide variety of materials.
National Metal Refining Company, Inc., ("Nametre"), in which
Holometrix holds a majority ownership position, manufactures
on-line sensors and laboratory instruments for measuring the
viscosity of a wide range of materials.
Three-Month Period Ended June 30, 1997 as Compared With
the Three-Month Period Ended June 30, 1996
Revenues in the third quarter of fiscal 1997 totaled
$1,020,000 as compared to $578,000 in the comparable quarter
of 1996, an increase of $442,000. This 76% increase is
primarily due to the acquisition of a majority ownership in
Nametre at the end of fiscal year 1996. The revenues for
Nametre alone totaled $492,000 and revenues for Holometrix
alone totaled $528,000, a 9% decrease over the comparable
quarter of fiscal 1996. This decrease is due primarily to
the decrease of revenue from a government contract and
certain instruments, offset by increased sales generated
from the introduction of the Company's new Lambda
instrument.
Cost of sales increased by $217,000, or 68%, from
$318,000 (55% of sales) in the third quarter of fiscal 1996
to $535,000 (52% of sales) in the same period of fiscal
1997. This 68% increase is attributable primarily to the
Nametre acquisition. Cost of sales for Holometrix alone
totaled $350,000, a 10% increase. This increase is
primarily due to the higher costs associated with the
introduction of the newly developed Lambda instrument.
Selling, general and administrative expenses increased by
$199,000, or 98%, from $203,000 (35% of sales) to $402,000
(39% of sales). The difference was primarily the result of
the acquisition of Nametre. Holometrix expenses alone
totaled $201,000, a decrease of 1%.
Research and development increased $63,000, from $42,000
(7% of sales) to $105,000 (10% of sales). The increase was
again primarily due to the acquisition of Nametre.
Holometrix R&D alone decreased $2,000, a decrease of 5%.
Loss from operations was $22,000 in the third quarter of
fiscal 1997, compared with an income of $15,000 in the
comparable period of fiscal 1996. Holometrix' loss from
operation alone was $63,000. Consolidated Net loss was
$53,000 in the third quarter of fiscal 1997. Holometrix net
loss alone was $75,000 compared with a net income of $5,000
in the comparable period of fiscal 1996. These losses are
primarily due to lower sales and increased costs of sales,
partially offset by income derived from the consolidation of
Nametre.
Nine-Month Period Ended June 30, 1997 as Compared With
the Nine-Month Period Ended June 30, 1996
Revenues for the nine months of fiscal 1997 totaled
$3,335,000 as compared to $1,423,000 in the comparable
period of 1996, an increase of $1,912,000. This 134%
increase is primarily due to the acquisition of a majority
ownership in Nametre at the end of fiscal year 1996. The
revenues for Nametre alone totaled $1,839,000 and revenues
for Holometrix alone totaled $1,496,000, a 5% increase over
the comparable period of fiscal 1996, due primarily to
increased sales and marketing activity and the introduction
of the Company's new Lambda instrument.
Cost of sales increased by $831,000, or 89%, from
$931,000 (65% of sales) for the nine months of fiscal 1996
to $1,762,000 (53% of sales) in the same period of fiscal
1997. This 89% increase is primarily due to the Nametre
acquisition. Cost of sales for Holometrix alone totaled
$1,034,000, an 11% increase. This increase is primarily due
to the higher costs associated with the introduction of the
newly developed Lambda instrument.
Selling, general and administrative expenses increased by
$889,000, or 165%, from $538,000 (38% of sales) to
$1,427,000 (43% of sales). The difference was primarily the
result of the acquisition of Nametre. Holometrix expenses
alone totaled $612,000, an increase of 14%.
The Holometrix increase was primarily due to increased legal
and audit expenses incurred in connection with the
consolidation and reporting of Nametre.
Research and development increased $157,000, from
$113,000 (8% of sales) to $270,000 (8% of sales). The
increase was again due to the acquisition of Nametre.
Holometrix R&D alone increased $14,000, an increase of 12%.
This increase was due to the addition of a development
engineer and ongoing development of new instrument products.
Loss from operations was $123,000 for the nine months of
fiscal 1997, compared with a loss of $159,000 in the
comparable period of fiscal 1996. Holometrix' loss from
operations alone was $278,000. Consolidated Net loss was
$219,000 for the nine months of fiscal 1997. Holometrix net
loss alone was $303,000 compared with a net loss of $185,000
in the comparable period of fiscal 1996. These losses are
primarily due to increased manufacturing, selling and
administrative costs, partially offset by income derived
from the consolidation of Nametre.
Total Assets increased by $187,000 (7%) in the nine
months of fiscal 1997, from $2,549,000 to $2,735,000. Cash
increased by $162,000, primarily as a result of increased
borrowing from the Company's bank line of credit and to
increased collections activity, resulting in a decrease in
accounts receivable of $90,000 in the nine months.
Inventories increased by $130,000, due to manufacturing
plans for increased sales volume and the introduction of a
new product. Other current assets decreased by $9,000, due
to the expensing of incurred but unbilled insurance
premiums. Other assets decreased by $20,000, due primarily
to $21,000 for amortization of goodwill and patents, offset
by a $1,000 increase in deposits. Equipment and fixtures
increased by $12,000, due to purchase of additional
equipment.
Total Liabilities increased by $292,000, primarily due to
a $200,000 increase in the Company's line of credit, and
increases of $263,000 in accounts payable and accrued
expenses. This was offset by decreases due to net payment
of $74,000 to a stockholder, decreases of $78,000 in long-
term debt, and decreases of $20,000 in notes payable to
stockholders and other current maturities. Accounts payable
increased by $63,000, from $1,204,000 at September 30, 1996,
to $1,267,000 at June 30, 1997, primarily due to increases
in operational expenditures and sales commissions.
As of June 30, 1997, the Company had an outstanding order
backlog for products and services of approximately $825,000
as compared to a backlog of $368,000 at June 30, 1996. The
Company believes the $ 825,000 backlog will largely be
realized in fiscal 1997. The outstanding backlog for
Holometrix alone at June 30, 1997, was approximately $
278,000, a decrease of $ 90,000 (24%). This decrease is due
primarily to the decrease of revenue from a government
contract and certain 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, 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 original
$165,000 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,
$65,000 of the note was converted to equity as payment and
the note was re-written for $100,000 payable in two
installments due in November 1997 and November 1998. At
June 30, 1997, the total outstanding balance was $100,000,
of which $50,000 is classified as current.
Notes payable line of credit
As of June 30, 1997, the Company, in concert with its
subsidiary Nametre and its parent company Tytronics obtained
new terms from Silicon Valley Bank for a combined line of
credit and term loan of $1,500,000, secured by substantially
all assets of the Company , its subsidiary Nametre and
Tytronics. This new line was in effect on July 24, 1997.
Advances under this line through September 1, 1997, can not
exceed the lesser of 70% of the Company's eligible accounts
receivable as defined, or the consolidated Tangible Net
Worth as defined plus the minority interest. Thereafter,
borrowings can not exceed the lesser of 70% of the Company's
eligible accounts receivable as defined, or 110% of the
consolidated Tangible Net Worth as defined. These
outstanding amounts are payable on demand and advances are
contingent upon maintaining certain covenants relative to
profitability, liquidity and tangible net worth. As of June
30, 1997, the Company was in compliance with all covenants
and ratios of the new line of credit. At June 30, 1997, the
Companys' borrowings under its prior line of credit were
$284,000.
In the second half of fiscal 1996 the Company introduced a
new instrument product line, 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. 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, it is unlikely that the Company will
become profitable in fiscal 1997, and there can be no
guarantees 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.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 128
"Earnings Per Share", issued by the Financial Standards
Board is effective for financial statements for fiscal years
ending after December 15, 1997. The new standard
establishes standards for computing and presenting earnings
per share.
The effect of adopting Statement of Financial Accounting
Standards No. 128 ("FAS No. 128") has not been estimated.
The Company is required to adopt the disclosure requirements
of FAS No. 128 during the period ended December 31, 1997.
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 and Treasurer
(Principal Executive Officer and Financial Officer)
Date: August 19, 1997
