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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 June 30, 2000
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to
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COMMISSION FILE NUMBER 0-16152
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METRISA, INC.
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(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
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DELAWARE 04-2891557
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
25 WIGGINS AVENUE, BEDFORD, MASSACHUSETTS 01730
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(781) 275-3300
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(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 [X] No [ ]
As of August 11, 2000, 1,425,313 shares of Common Stock were outstanding.
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
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<PAGE>
FORM 10-QSB
QUARTERLY REPORT
TABLE OF CONTENTS
Facing Page...................................................................1
Table of Contents.............................................................2
PART I. FINANCIAL INFORMATION (*)
Item 1. Financial Statements
Balance Sheets...............................................3
Statements of Operations.....................................4
Statements of Cash Flows.....................................5
Notes to Financial Statements................................6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..........................10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................14
Item 2. Changes in Securities........................................14
Item 3. Defaults upon Senior Securities..............................14
Item 4. Submission of Matters to a Vote of Security Holders..........14
Item 5. Other Information............................................14
Item 6. Exhibits and Reports on Form 8-K.............................14
SIGNATURES....................................................................15
(*) The financial information at September 30, 1999 has been taken from the
audited financial statements at that date. All other financial statements
are unaudited.
2
<PAGE>
Item 1. Financial Statements
<TABLE><CAPTION>
--------------------------------------------------------------------------------------------------------------
METRISA, INC.
BALANCE SHEETS
June 30, September 30,
ASSETS 2000 1999
----------- -----------
(Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 934,925 $ 1,298,984
Accounts receivable, less allowance for doubtful accounts --
of $167,000 at June 30, 2000 and September 30, 1999 2,002,764 1,784,246
Inventories: 1,213,439 1,196,530
Prepaid expenses 166,315 73,520
Notes receivable 50,000 10,554
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Total current assets 4,367,443 4,363,834
Equipment and fixtures, net 342,776 406,360
Other assets, net of accumulated amortization of $846,519 and
$621,568 at June 30, 2000 and September 30, 1999,
respectively 1,573,884 1,795,610
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Total assets $ 6,284,103 $ 6,565,804
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank 649,938 488,938
Accounts payable 1,213,406 1,260,668
Accrued expenses and other 451,570 569,675
Current portion of long-term debt 225,050 498,754
----------- -----------
Total current liabilities 2,539,964 2,818,035
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Long-term debt, less current portion 1,762,109 2,071,541
Commitments
Stockholders' equity:
Preferred stock $1.00 par value, 10,000,000 shares authorized,
0 shares issued and outstanding at December 31, 1999 and
September 30, 1999, respectively -- --
Common stock, $.50 par value, 4,000,000 shares authorized,
1,265,313 and 1,020,474 shares issued and outstanding at
June 30, 2000 and September 30, 1999, respectively 632,657 510,237
Additional paid-in capital 2,450,160 2,013,753
Accumulated deficit (1,100,787) (847,762)
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Total stockholders' equity 1,982,030 1,676,228
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Total liabilities and stockholders' equity $ 6,284,103 $ 6,565,804
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
METRISA, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------- --------------------------
2000 1999 2000 1999
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Sales:
Product sales $ 1,693,402 $ 1,867,700 $ 4,606,504 $ 4,738,590
Service Sales 259,414 318,730 869,704 1,034,899
----------- ----------- ----------- -----------
Net sales 1,952,816 2,186,430 5,476,208 5,773,489
Cost of sales 849,475 946,778 2,458,387 2,688,548
----------- ----------- ----------- -----------
Gross profit 1,103,341 1,239,652 3,017,821 3,084,941
Operating expenses:
Selling, general and administrative 827,678 964,674 2,478,889 2,874,485
Research and development 181,602 157,320 482,717 489,484
----------- ----------- ----------- -----------
1,009,280 1,121,994 2,961,606 3,363,969
----------- ----------- ----------- -----------
Profit/Loss from operations 94,061 117,658 56,215 (279,028)
Other income (expense):
Interest income 9,311 62,806 18,287 80,297
Interest expense (98,660) (146,262) (308,013) (336,899)
----------- ----------- ----------- -----------
(89,349) (83,456) (289,726) (256,602)
----------- ----------- ----------- -----------
Profit/Loss before income taxes 4,712 34,202 (233,511) (535,630)
Income taxes 19,514 (18,263) 19,514 6,777
----------- ----------- ----------- -----------
Net profit/loss $ (14,802) $ 52,465 $ (253,025) $ (542,407)
=========== =========== =========== ===========
Net profit/loss per common share - basic $ (0.01) $ 0.05 $ (0.22) $ (0.53)
- diluted $ (0.01) $ 0.05 $ (0.22) $ (0.53)
Shares outstanding - basic 1,265,259 1,020,174 1,171,436 1,020,174
- diluted 1,265,259 1,115,552 1,171,436 1,020,174
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
METRISA, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
June 30,
---------------------------
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2000 1999
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Operating activities:
Net loss $ (253,025) $ (542,407)
Adjustments to reconcile net loss to net cash
used in operating activities:
Gain on forgiveness of debt (5,000) --
Depreciation and amortization 282,979 233,384
Warrant amortization 37,149 36,000
Changes in operating assets and liabilities, net of
effects of purchase of subsidiaries:
Accounts receivable (218,518) (258,217)
Notes receivable (39,446) --
Inventories (16,909) (4,293)
Prepaid expenses (92,795) (8,107)
Accounts payable and accrued expenses (165,367) 90,364
----------- -----------
Net cash used in operating activities (470,932) (453,276)
Investing activities:
Additions to equipment and fixtures (32,999) (156,792)
Decrease in other assets 6,800 9,089
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Net cash used in investing activities (26,199) (147,703)
Financing activities:
Increase in bank line of credit 161,000 275,879
Principal payments on long-term debt (340,273) (618,771)
Principal payments on capital lease obligation (12,863) --
Payment of note payable for Micromet Acquisition -- (208,166)
Proceeds from sale of Common Stock 277,145 --
Proceeds from exercise of stock options 48,063 180
Purchase of treasury stock -- (43,277)
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Net cash used in financing activities 133,072 (594,155)
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Net decrease in cash and cash equivalents (364,059) (1,195,134)
Cash and cash equivalents at beginning of period 1,298,984 2,469,053
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Cash and cash equivalents at end of period $ 934,925 $ 1,273,919
=========== ===========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
METRISA, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles as it relates to interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended June 30, 2000,
and the nine month ended June 30, 2000, are not necessarily indicative of the
results that may be expected for the year ended September 30, 2000. The interim
financial statements should be read in conjunction with the audited financial
statements and footnotes thereto for the year ended September 30, 1999 included
in the Company's Annual Report on Form 10-KSB.
Metrisa, Inc. ("the Company") is comprised of three divisions, all
currently located in Bedford, MA with the recent relocation of the New Jersey
operations in November 1999. These divisions serve two broad markets, the
process/environmental markets, and the materials characterization market.
Tytronics manufactures and markets on-line liquid chemical analyzers to the
process and environmental industries; Nametre manufactures and markets on-line
viscosity analyzers to the process industries. Tytronics and Nametre, together,
constitute the process analytical industry segment. Holometrix Micromet provides
instrumentation and testing services for the measurement of thermal properties
and cure monitoring of composites for the automotive, aerospace, and electronics
packaging industries. Holometrix Micromet constitutes the materials
characterization industry segment.
Certain amounts in prior period financial statements have been
reclassified to conform to current presentation.
Supplemental Disclosure for Statement of Cash Flows
---------------------------------------------------
The company issued shares and warrants with an aggregate value of
$233,617 to facilitate the payment of debt. Cash paid for interest was
$61,511.00.
2. INVENTORIES
Inventories consisted of the following at:
June 30, 2000 September 30, 1999
------------- ------------------
Raw materials $699,101 $680,159
Work-in-process 260,741 302,453
Finished Goods 253,597 213,918
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$1,213,439 $1,196,530
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6
<PAGE>
3. 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. Outstanding options and warrants are included in the computation of
diluted earnings per share using the treasury stock method when their effect is
dilutive. Net income (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 income (loss) per share. The numerator (net income or
loss) is the same for the basic and diluted computations.
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
------------------- -----------------
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic shares 1,265,259 1,020,174 1,171,436 1,020,174
Effect of dilutive securities -- 95,378 --
--------- --------- --------- ---------
Dilutive shares 1,265,259 1,115,552 1,171,436 1,020,174
</TABLE>
The following table summarizes securities that were outstanding as of
June 30, 2000 and 1999, but not included in the calculation of diluted loss per
share because such shares are antidilutive:
2000 1999
---- ----
Options 131,411 170,880
Warrants 378,836 539,340
4. SEGMENT REPORTING
The Company operates its business in two identifiable reporting
industry segments: the development and manufacture of process analytical
instruments and the development and manufacture of materials characterization
instruments as well as contract testing services for materials characterization.
A summary of the Company's operations by segment follows:
<TABLE><CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
Sales:
<S> <C> <C> <C> <C>
Process analytical 1,333,169 1,411,774 3,371,128 3,757,939
Materials characterization 619,647 774,656 2,105,080 2,015,550
---------- ---------- ---------- ----------
1,952,816 2,186,430 5,476,208 5,773,489
Income (loss) from operations:
Process analytical 249,650 86,392 234,503 (147,893)
Materials characterization (155,589) 31,266 (178,288) (131,135)
---------- ---------- ---------- ----------
94,061 117,658 56,215 (279,028)
</TABLE>
7
<PAGE>
5. RESTRUCTURING CHARGES
As of September 30, 1999, the Company recorded a restructuring charge
of $149,288 related to the closure and subsequent consolidation of the Nametre
Division's Metuchen, New Jersey facility into the Company's Bedford,
Massachusetts, facility. The restructuring charge was primarily related to
employee severance expenses and certain non-recurring charges. During the three
months ended June 30, 2000, the Company paid approximately $30,800 in employee
severance charges. Expenditures during the nine months ended June 30, 2000
totaled approximately $125,000, with $114,000 related to severance expenses and
$11,000 in non-recurring expenses. A balance of approximately $24,000 remains in
current liabilities and payments of this amount are anticipated to be completed
by November.
6. DEBT AGREEMENT
On January 11, 2000, the Company entered into an agreement with an
existing shareholder and subordinated debt lender, Massachusetts Technology
Development Corporation ("MTDC") and an investment bank, Finova Capital
Corporation ("Finova"). MTDC was the holder of a subordinated promissory note
for $450,000, originally due November 23, 1999. Finova is the holder of a
subordinated promissory note for $2,000,000, payable in full on October 1, 2003,
with partial payments beginning October 1, 2000. Under the agreement, MTDC
converted $225,000 of the promissory note into 94,937 shares of the Company's
common stock. The Company repaid the remaining balance on the promissory note of
$225,000. All of MTDC's 164,814 warrants were canceled as part of this
transaction. Also, the Company repaid $100,000 of the Finova subordinated
promissory note and issued 4,310 warrants to purchase the Company's common
stock, at a price of $0.50 per share. These warrants have been given a value of
$8,617, included in financing costs and will be amortized over the life of the
debt.
As part of this agreement, existing investors, including an officer,
purchased additional equity of 116,939 shares of common stock for $277,145.
Also, directors of the Company, including officers, exercised options for 32,843
shares of the Company's common stock for $47,895. As a result of these
transactions, the total shares of common stock outstanding increased from
1,020,474 to 1,265,193 and warrants and options outstanding decreased from
699,064 to 505,717.
7. AGREEMENT TO PURCHASE MONITEK'S ASSETS
On March 14, 2000, the Company announced the signing of an Asset
Purchase Agreement to purchase substantially all of the assets (with certain
exceptions) ("Purchased Assets") of the optical and acoustic instrument business
of Monitek Technologies, Inc., and Monitek GmbH, wholly owned subsidiaries of
Sentex Sensing Technology, Inc. Closing of this transaction occurred on July 6,
2000, effective July 1, 2000.
Monitek is a manufacturer and marketer of liquid analysis products for the
chemical, petrochemical, refining, beverage and water markets, with operations
in Livermore, CA and Dusseldorf, Germany. Monitek's operation will become part
of Metrisa's process analytical business segment.
8
<PAGE>
The Purchased Assets were acquired by the Company for aggregate
consideration, determined by arms-length negotiation, of $1,644,200, consisting
of a cash payment in the amount of $500,000, assumption of liabilities of
$272,000, issuance of a promissory note in the amount of $493,000, and the
issuance of an aggregate of 160,000 shares of Metrisa common stock, $.50 par
value, valued at $2.37 per share. The Company utilized its working capital
reserves to fund the cash portion of the purchase price for the Purchased
Assets. The Company intends to continue to use the Purchased Assets to operate
an optical and acoustic measurement business.
8. NEW ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements," as amended by SAB No. 101B, which is effective no later than the
quarter ending September 30, 2001. SAB No. 101 clarifies the Securities and
Exchange Commission's views regarding the recognition of revenue. The Company
will adopt SAB No. 101 in the fourth quarter of fiscal 2001. The Company does
not expect the application of SAB No. 101 to have a material impact on their
financial position or results of operations.
In March 2000, the Financial Accounting Standard Board issued FASB
Interpretation ("FIN") No. 44, "Accounting for Certain Transactions Involving
Stock Compensation - an interpretation of APB Opinion No. 25." FIN No. 44
primarily clarifies (a) the definition of an employee for purposes of applying
APB Opinion No. 25, (b) the criteria for determining whether a plan qualifies as
a noncompensatory plan, (c) the accounting consequence of various modifications
to the terms of previously fixed stock options or awards, (d) and the accounting
for an exchange of stock compensation awards in a business combination. FIN No.
44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover
specific events that occurred after either December 15, 1998 or January 12,
2000. The Company does not expect the application of FIN No. 44 to have a
material impact on their financial position or results of operations.
9
<PAGE>
Item 2.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three-Month Period Ended June 30, 2000 as Compared With the Three-Month Period
------------------------------------------------------------------------------
Ended June 30, 1999
-------------------
NET REVENUES in the third quarter of fiscal 2000 totaled $1,952,816 as
compared to $2,186,430 in the comparable quarter of fiscal 1999, a decrease of
$233,614. This decrease of 11% was the result of decreased sales to Asia in the
process analytical industry segment, coupled with decreased instrument sales in
the materials characterization industry segment.
COST OF SALES decreased by $97,303 or 10% from $946,778 (43% of sales)
in the third quarter of fiscal 1999, to $849,475 (44% of sales) in the same
period of fiscal 2000. This decrease in cost of sales is attributed primarily to
lower sales volume. The increase in cost of sales as a percent of sales is due
to a slightly less favorable manufacturing mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES decreased by $136,996, or
14%, from $964,674 (44% of sales) to $827,678 (42% of sales). This decrease was
a result of savings from the relocation of Nametre's operations from Metuchen,
NJ to Bedford, MA, and certain other personnel cost reductions.
RESEARCH AND DEVELOPMENT increased $24,282 from $157,320 (7% of sales)
to $181,602 (9% of sales). This change is a result of increased new product
development efforts, most particularly in the materials characterization
industry segment.
INTEREST EXPENSE (NET) was $89,349 in the third quarter of fiscal 2000,
compared with $83,456 in the comparable period of fiscal 1999. This slight
increase is primarily due to increased interest on the Company's bank line of
credit, offset by decreased interest due to the retirement of certain
subordinated debt.
NET INCOME decreased by $67,267 from $52,465 in the third quarter of
fiscal 1999 to a loss of $14,802 in the third quarter of 2000. This decrease in
net income is due primarily to lower gross profit, as a result of lower sales,
coupled with incurring normal taxes, as compared to a reversal of overpaid
income taxes in the same period of fiscal 1999.
Nine-Month Period Ended June 30, 2000 as Compared With the Nine-Month period
----------------------------------------------------------------------------
Ended June 30, 1999
-------------------
NET REVENUES in the nine months of fiscal 2000 decreased by $297,281 to
$5,476,208 from $5,773,489 in the comparable period of fiscal 1999. This 5%
decrease was primarily a result of decreased Asian sales in the process
analytical industry segment coupled with a small decrease in instrument sales in
the material characterization industry segment.
COST OF SALES decreased by $230,161, or 8%, from $2,688,548 (47% of
sales) in the first nine months of fiscal 1999, to $2,458,387 (45% of sales) in
the same period of fiscal 2000. This decrease in cost of sales is attributed to
lower sales volume, coupled with savings from the relocation of Nametre's
operations from Metuchen, NJ to Bedford, MA.
10
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE expenses decreased by $395,596, or
14%, from $2,874,485 (50% of sales) in fiscal 1999 to $2,478,889 (45% of sales)
in fiscal 2000. This decrease is due to the relocation of Nametre's operations,
and certain other personnel cost reductions.
RESEARCH AND DEVELOPMENT decreased by $6,767, or 1%, from $489,484 (8%
of sales) in fiscal 1999 to $482,717 (9% of sales) in fiscal 2000. The change
was due to lower research and development efforts in the first half of fiscal
2000, offset by additional expenditures in the third quarter of fiscal 2000.
INTEREST EXPENSE was $289,726 for the first nine months of fiscal 2000,
compared with $256,602 in the comparable period of fiscal 1999. The increase of
$33,124 is due primarily to increased interest on the Company, increased bank
line of credit, offset by decreased interest due to the retirement of certain
subordinated debt.
NET LOSS was $253,025 in the first nine months of fiscal 2000, compared
with a net loss of $542,407 in the comparable period of fiscal 1999. This
decrease in net loss was primarily due to a decrease in cost of sales and
selling, general and administrative expenses as a result of relocation of
Nametre's operations from Metuchen, NJ to Bedford, MA, coupled with certain
other personnel cost reductions, all offset by decreased sales volume.
LIQUIDITY AND CAPITAL RESOURCES
TOTAL ASSETS decreased by $281,701 (4%) in the first nine months of
fiscal 2000, from $6,565,804 at September 30, 1999 to $6,284,103 at June 30,
2000. Cash decreased by $364,059, primarily due to the funding of losses,
coupled with prepayments and investments associated with the Monitek acquisition
(see description below). Accounts receivable increased by $218,578, due to
increased sales in the third fiscal quarter, coupled with somewhat slower
collections on certain orders. Inventories remained approximately constant,
increasing only $16,909. Prepaid expenses increased by $92,795, due to the
inclusion of certain financing and legal expenses associated with the Monitek
acquisition. Notes Receivable increased by $39,446, largely due to an advance
deposit associated with the Monitek acquisition. Equipment and fixtures
decreased by $63,584, due to limited capital expenditures and continuing
depreciation. Other assets decreased by $221,726, due largely to continuing
amortization.
TOTAL CURRENT LIABILITIES decreased by $278,071 in the first nine
months of fiscal 2000, largely due to the repayment and conversion to equity of
$450,000 of current debt, coupled with decreases of $118,105 in accrued expenses
and $47,262 in accounts payable, offset by an increase in the company's bank
line of credit of $161,000.
TOTAL LONG-TERM DEBT decreased by $309,432 from $2,071,541 at September
30, 1999 to $1,762,109 at June 30, 2000. This decrease is due to the
reclassification of $200,000 of long-term debt as current debt, coupled with
certain debt repayments.
CASH FLOWS were negative in the first nine months of fiscal 2000,
amounting to $364,059, as compared to a negative $1,195,134 in the comparable
period of fiscal 1999. Operating cash flows were also negative at $470,932,
compared to $453,276 for the same period in fiscal 1999. The increase in
negative operating cash flow was primarily due to a reduction in Accounts
Payable coupled with an increase in Other Current Assets, offset by a decreased
net loss and increased depreciation and amortization. The net cash used in
investing activities was lower by $121,504, due to decreased investments in
equipment and fixtures. The net cash used in financing activities changed
significantly, from a cash outflow of $594,155 in the first nine months of
fiscal 1999 to a cash inflow of $133,072. This change was cause by significantly
lower debt repayments, offset by proceeds from the sale of Common Stock and the
exercise of stock options.
11
<PAGE>
As of June 30, 2000, the Company had an outstanding order backlog for
product and services of approximately $1,131,000 as compared to a backlog of
$853,000 as of June 30,1999. The Company believes that all except $56,000 of the
current backlog will be realized in fiscal 2000.
The Company expects to continue to invest in enhanced sales and
marketing efforts, new product development, and the development of strategic
relationships, including licensing, acquisitions, mergers, or OEM agreements.
Management believes that the operating capital and the line of credit from
Silicon Valley Bank, and the $2,000,000 subordinated debt financing from Sirrom
Capital Corporation (now Finova), will provide sufficient capital to maintain
stable Company operations throughout fiscal 2000. However, there can be no
assurance that additional or adequate profitability and operating funds will be
generated as a result of revenue increases or cost reductions, or that strategic
relationships will materialize, or that additional funding, if required, can be
obtained on acceptable terms.
Notes Payable Line of Credit
----------------------------
The Company is party to a Silicon Valley Bank combined line of credit
and term loan of $1,250,000, secured by substantially all assets of the Company.
Advances under this line cannot exceed 75% of the Company's eligible accounts
receivable plus 20% of inventory, as defined. All outstanding amounts are
payable on demand and advances are contingent upon maintaining certain covenants
relative to cash and borrowing availability under the line of credit. As of June
30, 2000, the Company was in compliance with all covenants of this line of
credit, and the term loan was fully repaid.
As of September 29, 1998, the Company was party to a $2,000,000
subordinated debt financing agreement with Sirrom Capital Corporation (now
Finova), secured by substantially all of the assets of the Company, but
subordinated to the Silicon Valley Bank financing. This loan is due in full
September 30, 2003, with interest-only payments for the first two years, and
partial payments totaling $750,000 due over the subsequent three years; one of
those payments, for $200,000, is due on October 1, 2000. This financing required
maintenance of a covenant in which the ratio of long term debt (excluding
current portion) to EBITDA cannot exceed certain levels. In January 2000, this
covenant was amended to a cash flow covenant, effective in the quarter ending
March 31, 2000, and continuing through the end of fiscal 2000. As of June 30,
2000, the Company was in full compliance with the amended covenant.
On January 11, 2000, the Company entered into an agreement with an
existing shareholder and subordinated debt lender, Massachusetts Technology
Development Corporation ("MTDC"), and Finova. MTDC was the holder of a
subordinated promissory note for $450,000, due November 23, 1999. As noted,
Finova is the holder of a subordinated promissory note for $2,000,000, payable
in full on October 1, 2003. Under the agreement, MTDC converted $225,000 of the
promissory note into 94,937 shares of the Company's common stock, at a
conversion price of $2.37 per share, and the Company repaid the remaining
balance on the promissory note of $225,000. The Company also repaid $100,000 of
the Finova subordinated promissory note and issued a warrant to Finova for an
additional 4,310 shares of the Company's common stock, at a price of $0.50 per
share.
In connection with this agreement, existing stockholders, including an
officer, purchased additional equity of 116,939 shares of common stock for
$277,145, at a price of $2.37 per share. In addition, directors of the Company,
including officers, exercised options for 32,843 shares of the Company's common
stock for $47,895. As a result of these transactions, the total shares of common
stock outstanding increased from 1,020,474 to 1,265,193 and warrants and options
outstanding decreased from 699,064 to 505,717.
Restructuring Charges
---------------------
As of September 30, 1999, the Company recorded a restructuring charge
of $149,288 related to the closure and subsequent consolidation, in part, of the
Nametre Division's Metuchen, New Jersey facility into the Company's Bedford,
12
<PAGE>
Massachusetts, facility. The restructuring charge was primarily related to
employee severance and certain non-recurring charges. The relocation took place
in November 1999 with a complete closure of the facility in January 2000.
Expenditures during the nine months ended June 30, 2000, were approximately
$125,000 with $114,000 related to severance and $11,000 related to non-recurring
expenses. In the three months ending June 30, 2000, additional expenses,
primarily severance payments, of $30,800, were incurred. These expenses were
charged against current liabilities, leaving a balance of approximately $24,000
in current liabilities, largely related to future severance payments. The
Company anticipates that these restructuring payments will be substantially
completed by November.
Agreement to Purchase Monitek's Assets
--------------------------------------
The Company announced the signing of an Asset Purchase Agreement to
purchase substantially all of the assets (with certain exceptions) ("Purchased
Assets") of the optical and acoustic instrument business of Monitek
Technologies, Inc., and Monitek GmbH, wholly owned subsidiaries of Sentex
Sensing Technology, Inc. Closing of this transaction occurred on July 6, 2000,
effective July 1, 2000.
Monitek is a manufacturer and marketer of liquid analysis products for
the chemical, petrochemical, refining, beverage and water markets, with
operations in Livermore, CA and Dusseldorf, Germany. Monitek's operation will
become part of Metrisa's process analytical business segment.
The Purchased Assets were acquired by the Company for aggregate
consideration, determined by arms-length negotiation, of $1,644,200, consisting
of a cash payment in the amount of $500,000, assumption of liabilities of
$272,000, issuance of a promissory note in the amount of $493,000, and the
issuance of an aggregate of 160,000 shares of Metrisa common stock, $.50 par
value, valued at $2.37 per share. The Company utilized its working capital
reserves to fund the cash portion of the purchase price for the Purchased
Assets. The Company intends to continue to use the Purchased Assets to operate
an optical and acoustic measurement business.
Forward-Looking Statements
--------------------------
This form 10-QSB and the documents incorporated herein by reference
contain forward looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about the Company's industry, management belief's and certain
assumptions made by the Company's management. Words such as "anticipates",
"expects", "intends", "plans", "believes", "seeks", "estimates", variations of
such words and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results may differ materially from those expressed or
forecasted in any such forward-looking statements. Unless required by the law,
the Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
However, readers should carefully review the risk factors set forth in other
reports or documents the Company files from time to time with the Securities And
Exchange Commission, particularly the Company's Integrated Annual Report to
Stockholders and Form 10-KSB, other Quarterly Reports on Form 10-QSB, and any
Current Reports on Form 8-K.
13
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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. Submissions of Matters to a Vote of Security Holders
----------------------------------------------------
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Not applicable.
(b) Reports on Form 8-K
-------------------
The Form 8-K dated June 6, 2000 was filed by the Company during
the fiscal quarter ended June 30, 2000 relating to the
resignation of the Company's independent auditors.
14
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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.
Metrisa, Inc.
By: \s\ John E. Wolfe
---------------------
John E. Wolfe
President
Date: August 14, 2000
15
