Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 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)
(781) 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 December 31, 1997, 23,861,878 shares of Common Stock were
outstanding.
Transitional Small Business Disclosure Format:
Yes No
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, 1997 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,
1997 1997
(*)
CURRENT ASSETS:
Cash and cash equivalents $201,156 $ 184,423
Accounts receivable, less allowance
for doubtful accounts of $35,000 713,000 929,480
Inventories 823,431 845,256
Other current assets 49,381 50,958
TOTAL CURRENT ASSETS 1,786,968 2,010,117
EQUIPMENT AND FIXTURES - net 381,502 394,993
OTHER ASSETS - net 298,083 305,395
TOTAL ASSETS $2,466,553 $2,710,505
See notes to condensed consolidated financial statements.
(*)Balance sheet at September 30, 1997 has been taken from the
audited financial statements at that date. All other financial
statements are unaudited.
HOLOMETRIX, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
December 31, September 30,
1997 1997
(*)
CURRENT LIABILITIES:
Notes payable - stockholders$ 72,015 $ 72,015
Accounts payable 995,519 1,266,795
Accrued payroll and related expenses 32,875 107,850
Accrued other expenses 88,803 158,716
Due to stockholder 299,707 51,576
Current maturities of
long-term obligations 68,967 93,967
TOTAL CURRENT LIABILITIES 1,557,886 1,750,919
LONG-TERM DEBT,
Notes payable-stockholders,
less current maturities 192,039 210,043
Long term obligations,
less current maturities 13,344 14,631
TOTAL LIABILITIES 1,763,269 1,975,593
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARY 120,963 103,536
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
30,000,000 shares authorized;
issued 28,098,157 280,982 280,982
outstanding 23,861,878
Additional paid-in capital 2,544,409 2,544,409
Accumulated deficit 2,139,070 2,090,015
686,321 735,376
Less: Treasury stock (at cost) 104,000 104,000
TOTAL STOCKHOLDERS'
EQUITY 582,321 631,376
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,466,553 $2,710,505
See notes to condensed consolidated financial statements.
(*)Balance sheet at September 30, 1997 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,
1997 1996
NET REVENUES $1,118,882 $1,082,622
COST OF SALES 560,256 568,539
GROSS PROFIT 558,626 514,083
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 500,346 463,272
RESEARCH AND DEVELOPMENT 79,104 74,965
TOTAL OPERATING EXPENSE 579,450 538,237
`
LOSS FROM OPERATIONS (20,824) (24,154)
INTEREST EXPENSE - net (10,804) (6,237)
LOSS BEFORE MINORITY INTEREST (31,628) (30,391)
MINORITY INTEREST IN NET INCOME OF
CONSOLIDATED SUBSIDIARY (17,427) (3,611)
NET LOSS ( $49,055) ( $34,002)
NET LOSS PER COMMON SHARE:
BASIC ($0.00) ($0.00)
ASSUMING DILUTION ($0.00) ($0.00)
See notes to condensed consolidated financial statements.
HOLOMETRIX, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three-Month Period Ended December 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($49,055) ($34,002)
Adjustments to reconcile net loss to net
cash provided by (used for) operating activities:
Depreciation and amortization 35,097 36,430
Minority interest 17,427 3,611
Changes in operating assets and liabilities:
Accounts receivable 216,480 130,483
Inventories 21,825 (53,698)
Other current assets 1,577 14,621
Accounts payable and
accrued expenses (416,164) (69,798)
Net cash provided by (used for)
operating activities (172,813) 27,647
CASH FLOWS FROM INVESTING ACTIVITIES:
Equipment and fixtures additions (14,294) (8,487)
Net cash used for
investing activities (14,294) (8,487)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable (25,000) (20,000)
Due to stockholders, net 230,127 (68,495)
Subscription receivable payments - 10,000
Borrowings under notes
payable-line of credit - 75,000
Decrease in long-term obligations (1,287) (26,204)
Net cash provided by (used for)
financing activities 203,840 (29,699)
Net increase (decrease)
in cash and cash equivalents 16,733 (10,539)
Cash and cash equivalents,
beginning of period 184,423 27,495
Cash and cash equivalents,
end of period $ 201,156 $ 16,956
See notes to condensed consolidated financial statements.
HOLOMETRIX, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
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, 1997.
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.
Note B - Net Loss Per Share
In the first quarter of fiscal 1998, the Company adopted
Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
"Earnings Per Share". SFAS 128 requires the presentation of both
basic and diluted earnings per share and replaces the previously
required standards for computing and presenting earnings per
share. Net loss per share amounts for all periods have been
presented and where appropriate restated to conform to the
requirements of SFAS 128. The following is a reconciliation of
the denominator (number of shares) used in the computation of net
loss per share. The numerator (net income) is the same for the
basic and diluted computations.
Three Month Period
Ended December 31,
1997 1996
Basic shares 23,861,878 22,296,878
Effect of dilutive -- --
securities
Dilutive shares 23,861,878 22,296,878
The following table summarizes securities that were outstanding
as of December 31, 1997 and 1996, but not included in the
calculation of diluted net loss per share because such shares are
antidilutive:
Three Month Period
Ended December 31,
1997 1996
Options 1,094,000 833,000
Warrants 550,000 2,100,000
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month Period Ended December 31, 1997, as Compared With the
Three-Month Period Ended December 31, 1996
Revenues in the first quarter of fiscal 1998 totaled
$1,119,000 as compared to $1,083,000 in the comparable quarter of
1997, an increase of $36,000. This 3% increase is primarily due
to an increase in National Metal Refining Company, Inc.,
(Nametre) sales. The revenues for Nametre alone totaled
$612,000, a 6% increase over the comparable quarter of fiscal
1997; revenues for Holometrix alone totaled $507,000, equal to
revenues for the comparable quarter of fiscal 1997.
Cost of sales decreased by $9000, or 2%, from $569,000 (53%
of sales) in the first quarter of fiscal 1997 to $560,000 (50% of
sales) in the same period of fiscal 1998. This 2% decrease is
attributable primarily to Nametre. Cost of sales for Holometrix
alone totaled $342,000, a 5% increase, and for Nametre alone
totaled $218,000, a 10% decrease. Management attributes this to
improved operating efficiencies at Nametre.
Selling, general and administrative expenses increased by
$37,000, or 8%, from $463,000 (43% of sales) to $500,000 (45% of
sales). Holometrix' expenses alone totaled $193,000, an increase
of 9%, and for Nametre alone totaled $307,000, an increase of 8%.
The increase was primarily due to increased marketing and sales
activities.
Research and development increased $4000 from $75,000 (7% of
sales) to $79,000 (also 7% of sales). Holometrix' R&D alone
increased $5000, an increase of 15% resulting from ongoing
product development.
Loss from operations was $21,000 in the first quarter of
fiscal 1998, compared with a loss of $24,000 in the comparable
period of fiscal 1997. Holometrix' loss from operations alone
was $70,000. Consolidated Net loss was $49,000 in the first
quarter of 1998. Holometrix' net loss alone was $77,000 compared
with a net loss of $40,000 in the comparable period of fiscal
1997. 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 $244,000 (9%) in the first
quarter, from $2,711,000 to $2,467,000. Cash increased by
$17,000 and, due to increased collections activity, accounts
receivable decreased by $216,000 in the first quarter.
Inventories decreased by $22,000. Other assets decreased by
$7,000 and equipment and furniture and fixtures and other current
assets decreased by $23,000, both due primarily to depreciation
and amortization.
Total Liabilities decreased by $212,000, primarily due to a
decrease of $271,000 in accounts payable, decrease of $145,000 in
accrued payroll and other expenses, and $25,000 in current
maturities of long-term debt, offset by an increase of $230,000
due to stockholders. Accounts payable decreased by $271,000,
from $1,267,000 at September 30, 1997, to $996,000 at December
31, 1997, primarily due to payment of extended payables present
at September 30,1997, to conserve cash. Accrued payroll and
other expenses decreased by $145,000, from $267,000 at September
30,1997, to $122,000 at December 31,1997, primarily because of
payment of commission due to manufacturers representatives and
internal employees. Current liabilities due to stockholder
increased by $248,000 from $52,000 at Sept. 30, 1997, to $300,000
at December 31,1997, due to increased borrowings. Notes payable
stockholder decreased by $18,000 from $210,000 at September
30,1997, to $192,000 at December 31,1997, due to payment of debt
obligations.
As of December 31,1997, the Company had an outstanding order
backlog for products and services of approximately $646,000 as
compared to a backlog of $801,000 at December 31,1996. The
Company believes the $646,000 backlog will be realized in fiscal
1998. The outstanding backlog for Holometrix alone was
approximately $174,000, a decrease of $260,000 (60%). The
backlog for Nametre alone at December 31,1997, was $472,000, an
increase of $105,000 (29%).
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Operating cash flows were negative in the first quarter of
fiscal 1998, amounting to ($172,813) as compared to $27,647 in
the comparable quarter of fiscal 1997. Operating cash flows
approximated the sum of net loss plus depreciation and
amortization, with decreases in accounts receivable of $216,480
and inventories of $21,825 being offset by a decrease in accounts
payable and accrued expense of $416,164.
The Company funded increases in equipment and fixtures of
$14,294. Notes Payable to stockholder increased by $230,127.
The net affect of these transactions was in increase in cash
of $16,733, providing cash at end of the first quarter 1998 of
$201,156.
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 December
31, 1997, the Company was not in compliance with all covenants
and ratios of the new line of credit. The Company obtained a
waiver from Silicon Valley Bank for these violations.
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
1998. As previously indicated, the Company has proposed to enter
into a reorganization ("Reorganization") pursuant to which
Tytronics and Nametre will be merged into the wholly-owned
subsidiary of the Company, Holometrix Acquisition Corp., with the
result that Holometrix Acquisition Corp. will be the surviving
entity. Following the Reorganization, Holometrix Acquisition
Corp. will be merged into the Company. Management believes that
the Reorganization will result in increased operating capital for
the Company and more stable Company operations since Tytronics
and Nametre have a recent history of profitable operations.
However, there can be no guarantees that adequate operating funds
will be generated as a result of the Reorganization or through
revenue increases, or 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 material 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, 1997.
Item 5. Other Information
Not applicable.
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits
Financial Data Schedule.
(b) Reports on Form 8-K
No 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
John E. Wolfe
President
Date: February 11, 1998
<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>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 201,156
<SECURITIES> 0
<RECEIVABLES> 748,000
<ALLOWANCES> (35,000)
<INVENTORY> 823,431
<CURRENT-ASSETS> 1,786,969
<PP&E> 1,385,784
<DEPRECIATION> (1,004,282)
<TOTAL-ASSETS> 2,466,554
<CURRENT-LIABILITIES> 1,557,887
<BONDS> 326,346
0
0
<COMMON> 280,982
<OTHER-SE> 301,339
<TOTAL-LIABILITY-AND-EQUITY> 2,466,554
<SALES> 1,118,882
<TOTAL-REVENUES> 1,118,882
<CGS> 560,256
<TOTAL-COSTS> 560,256
<OTHER-EXPENSES> 579,450
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,804
<INCOME-PRETAX> (31,628)
<INCOME-TAX> 0
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<DISCONTINUED> 0
<EXTRAORDINARY> 17,427
<CHANGES> 0
<NET-INCOME> (49,055)
<EPS-PRIMARY> 0
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