SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------
FORM 10-QSB
-----------
Mark One
[X] OUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period ended September 30, 1997
OR
[_] TRANSITION REPORT PURSUANDT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
1934
For the transition period from period from ______ to _______
Commission File Number 0-21816
INFINITE MACHINES CORP.
(Exact name of Registrant as specified in its charter)
Delaware 52-1490422
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
300 Metro Center Boulevard, Warwick, RI 02886
---------------------------------------------
(Address of principal executive office) (Zip Code)
(401) 737-7900
(Registrant's telephone number, including area code)
Indicate by check mark 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 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 November 5, 1997 the Registrant had a total of 12,497,581 shares of Common
Stock, $.001 par value, outstanding.
<PAGE>
INDEX
INFINITE MACHINES CORPORATION
PART 1. FINANCIAL INFORMATION
Page
- ----
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 1
Consolidated Statements of Operations - Six
and Nine Months Ended September 30, 1997 and 1996 2
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1997 and 1996 3
Notes to Unaudited Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 6-11
PART II. OTHER INFORMATION
- --------------------------
Items
1-6 Not Applicable
SIGNATURES
- ----------
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
ASSETS 1997 1996
- ------ ------------ ------------
Current assets
Cash and cash equivalents $ 1,411,680 $ 333,187
Restricted funds 61,600 68,601
Accounts receivable, net of allowances 777,143 672,441
Inventories 141,448 133,035
Other current assets 194,387 134,281
----------- -----------
Total current assets 2,586,258 1,341,545
Property and Equipment, net 4,149,968 3,773,105
Other assests
Notes receivable - stockholders 110,611 132,258
Purchased technology, net 32,500 157,834
Inventoried parts 89,504 143,206
Investment in Spectra Science Corp. - at equity 1,268,249 2,195,895
Other intangible assets, net 273,805 255,416
----------- -----------
1,774,669 2,884,609
----------- -----------
$ 8,510,895 $ 7,999,259
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 471,572 $ 250,000
Accounts payable and accrued expenses 1,022,189 769,045
Current portion of litigation settlement payable -- 549,000
Current maturities of long-term obligations 245,191 245,187
----------- -----------
Total current liabilities 1,738,952 1,813,232
Long term obligations 3,384,510 3,984,557
Litigation settlement payable 100,000 100,000
Stockholders' equity:
Common stock, $.001 par value, 20,000,000
shares authorized, 12,460,709 and 8,693,162
shares issued and outstanding 12,461 8,694
Additional paid-in capital 19,067,328 15,067,120
Accumulated deficit (15,792,356) (12,974,344)
----------- -----------
Total stockholders' equity 3,287,433 2,101,470
----------- -----------
$ 8,510,895 $ 7,999,259
=========== ===========
See accompanying notes to unaudited financial statements.
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1997 1996 1997 1996
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $1,361,741 $ 1,141,026 $ 4,056,124 $ 3,735,618
Cost of goods sold 817,216 838,461 2,370,260 2,461,875
---------- ----------- ----------- -----------
Gross profit 544,525 302,565 1,685,864 1,273,743
Costs and expenses
Operating expenses 32,058 71,830 91,981 127,047
Research and development 189,785 -- 660,072 --
General and administrative expenses 391,173 259,967 1,095,971 948,164
Selling expenses 111,626 127,631 382,302 377,015
Depreciation and amortization 244,847 285,690 569,274 590,950
---------- ----------- ----------- -----------
Total costs and expenses 969,489 745,118 2,799,600 2,043,176
Operating loss (424,964) (442,553) (1,113,736) (769,433)
Other income (expense)
Interest income 1,498 28,306 6,569 40,208
Interest expense (101,493) (1,406,060) (707,279) (1,639,598)
Equity in loss of unconsolidated subsidiary (276,251) (222,863) (1,008,043) (222,863)
Loss due to issuance of stock by
unconsolidated subsidiary (62,341) -- (62,341) --
Gain on sale of technology -- -- 38,064 --
Other 31,762 (40,674) 28,754 5,364
---------- ----------- ----------- -----------
Total other income (expense) (406,825) (1,641,291) (1,704,276) (1,816,889)
Loss before provision for income taxes (831,789) (2,083,844) (2,818,012) (2,586,322)
Provision for income taxes -- (6,904) -- 14,096
---------- ----------- ----------- -----------
Net loss $ (831,789) $(2,076,940) (2,818,012) $(2,600,418)
========== =========== =========== ===========
Per share:
Net loss per common share $ (0.09) $ (0.36) $ (0.30) $ (0.44)
========== =========== =========== ===========
Weighted average number of common
shares outstanding 9,318,851 5,807,589 9,318,851 5,807,589
========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
INFINITE MACHINES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,818,012) $(2,600,418)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 569,274 590,950
Interest expense attributable to convertible
debentures discount 406,849 1,393,555
Interest and other expenses related to conversion of
debentures paid via issue of additional common stock 57,898 --
Gain of dispositions of assets (38,064) --
Equity in net loss of unconsolidated subsidiary 1,008,043 222,863
Loss due to issuance of stock by unconsolidated
subsidiary 119,603 --
Asset write-downs and allowances 21,647 28,021
Changes in assets and liabilities:
(Increase) decrease in assets
Accounts receivable (104,702) 195,065
Other assets (60,106) (190,226)
Inventory and inventoried parts 45,289 66,935
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 298,473 (39,866)
Litigation settlement payable (350,000) --
---------- ----------
Net cash used in operating activities (843,808) (333,121)
Cash flows from investing activities:
Purchase of property and equipment (754,798) (182,720)
Proceeds from sale of technology 155,898 --
Investment in Spectra Science Corp. (200,000) (1,650,000)
---------- ----------
Net cash used in investing activities (798,900) (1,832,720)
Cash flows from financing activities:
Proceeds from convertible debentures, net of expenses 968,000 3,764,000
Borrowings of long term debt -- 1,250,000
Net borrowings (repayments) of short term debt 221,572 (146,621)
Repayments of long term obligations (145,372) (1,366,863)
Decrease in restricted funds, net 7,001 6,470
Proceeds from issuances of common stock, net of expenses 1,670,000 192,593
---------- ----------
Net cash provided by financing activities 2,721,201 3,699,579
Net increase in cash and cash equivalents 1,078,493 1,533,738
Cash and cash equivalents - beginning of period 333,187 24,702
---------- ----------
Cash and cash equivalents - end of period $ 1,411,680 $ 1,558,440
========== ==========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
INFINITE MACHINES CORP.
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1. - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Infinite Machine Corp.
(the "Company") 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 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 and nine month
periods ended September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997. For further
information, refer to the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996, which includes audited financial statements and
footnotes as of and for the years ended December 31, 1996 and 1995.
NOTE 2. - CHANGE IN REPORTING ENTITY
Effective September 19, 1997, the Company's voting interest in Spectra
Science Corp. was reduced below 50%. Prior to this time, the Company's financial
statements were prepared on a consolidated basis which included Spectra Science
Corp. as a subsidiary. Effective with this change in interest, the operating
results of Spectra Science Corp. will be reported on the Company's financial
statements under the equity method. All comparative financial information has
been restated to reflect this change in reporting entity. There is no effect on
net income or earning per share for the current or any prior periods due to this
change.
NOTE 3. - CONVERTIBLE PROMISSORY NOTES
As of September 30, 1997, $100,000 of 7% convertible debentures due July
2000 were outstanding. The holder may, at his or her sole option, convert all or
any part of the outstanding principal amount and accrued and unpaid interest of
this note into that number of shares of the common stock of the Company, par
value $.001, as is equal to such amount then being converted divided by 80% of
the average closing price of the Company's common stock on the ten trading days
preceding conversion.
On February 24, 1997, the Company completed an additional $1,100,000
private placement financing through the sale of 6% convertible debentures due
December 31, 1998. The holders may, at their sole option during the period
commencing 120 days after the date of issuance, convert all or any part of the
outstanding principal amount and accrued and unpaid interest of these notes into
that number of shares of the common stock of the Company, par value $.001, as is
equal to such amount then being converted divided by 73% of the average closing
price of the Company's common stock on the five trading days preceding
conversion. During the quarter ended September 30, 1997, all of the debentures,
as well as accrued interest expense in the amount of $25,329, have been
converted to 1,109,744 shares of common stock.
<PAGE>
INFINITE MACHINES CORP.
NOTES TO UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4. - ISSUANCE OF COMMON STOCK
During the quarter ended September 30, 1997, the Company issued 1,923,077
shares of common stock to Clearwater Fund IV LLC in exchange for aggregate
consideration of $1,900,000.
NOTE 5. - INTEREST EXPENSE ON BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE
DEBENTURES
The Securities Exchange Commission (the "SEC") staff recently adopted a
new position on accounting for convertible debt instruments which are
convertible at a discount to market. The Company had previously accounted for
the interest on its convertible debt instruments based upon the coupon rate. In
a letter dated March 13, 1997, to the Emerging Issues Task Force of the
Financial Accounting Standards Board, the SEC expressed that they believe that a
beneficial conversion feature on convertible debt instruments should be
recognized and measured by allocating a portion of the proceeds equal to the
intrinsic value of that feature to additional paid-in capital. The intrinsic
value is calculated at the date of issue as the difference between the
conversion price and the fair value of the Company's common stock, multiplied by
the number of shares into which the debentures are convertible. This discount
resulting from the allocation of the proceeds increases the effective interest
rate of the security and should be reflected as a charge to interest expense.
The amortization period of the interest discount is from the date of the
issuance of the security to the date it first becomes convertible. For the nine
month period ended September 30, 1997, interest expense has been recognized for
this discount in the amount of $406,849.
NOTE 6. - EFFECT OF NEWLY ISSUED ACCOUNTING PRONOUNCEMENT
Statement of Financial Accounting Standard No. 128 - "Earnings Per Share"
has recently been issued. This pronouncement simplifies the calculation of
earnings per share (EPS), which now requires two amounts of EPS to be disclosed:
basic EPS and diluted EPS. The effective date of this pronouncement is for
periods ending after December 15, 1997, and early application is not permitted.
The basic and diluted EPS computed pursuant to the new pronouncement would have
been the same as the EPS calculation as currently presented for the three and
nine month periods ended September 30, 1997 and 1996.
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements made in this Quarterly Report on Form 10-QSB are
"forward-looking statements" (within the meaning of the Private Securities
Litigation Reform Act of 1995) regarding the plans and objectives of management
for future operations. Such statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements expressed or implied by such forward-looking statements. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the forward looking statements
included in this Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein
particularly in view of the Company's early stage operations, the inclusion of
such information should not be regarded as a representation by the Company or
any other person that the objectives and plans of the Company will be achieved.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
GENERAL
Infinite Machines Corp., (the "Company") does business in the fields of
laser material processing, advanced manufacturing methods, and laser-application
technology. Laser Fare is the main operating subsidiary, which is wholly owned
and was acquired in July 1994 for stock. Additionally, Infinite has two
operating divisions of Laser Fare, the Advance Technology Group ("ATG"), engaged
in contract research and development, and ExpressTool Corp., ("ExpressTool"),
created to exploit new rapid tooling technology. The Company is also the largest
shareholder of Spectra Science Corp. ("Spectra Science"), which was formed in
August 1996.
Laser Fare
Laser Fare operations continue to be profitable. While primarily engaged
in contract laser material processing, Laser Fare develops new applications for
industrial lasers. The facility's 18 high powered lasers are capable of
performing a wide variety of manufacturing processes and is capable of laser
operations requiring four and five-axis manipulation. Approximately 75% of Laser
Fare's sales comes from customers in the medical device, aerospace and power
generation industries. Customers include General Electric, United Technologies,
Allied Signal, Polaroid, Stryker Medical and Center Laboratories. Laser Fare
also provides a variety of value-add services, that include assembly, heat
treating, coating, testing, and inspection. In addition to an expected twenty
percent growth rate from established customers, it is anticipated that new
customers will increase their activity in last quarter of 1997. On October 23,
1997, Laser Fare was awarded a two-year contract in excess of $5 million by
<PAGE>
Dey Laboratories to manufacture and supply for retail and hospital customers,
Astech Peak Flow Meters which measures lung capacity for asthma patients. Laser
Fare has sufficient facilities and equipment to support planned near-term
expansion, as well as expand the scope of services it provides to existing and
new customers.
ExpressTool
ExpressTool is a business formed to commercialize proprietary technology
which permits molds for plastic injection moldings to be more productive than
molds made by conventional techniques. On October 17, 1997, ExpressTool was
awarded a contract in excess of $450,000 by Magnetec(R) Corporation, a
wholly-owned subsidiary of Transact Technologies Inc., (NASDAQ-TACT), to produce
components for a new generation of high speed printers. ExpressTool will utilize
several of its proprietary technologies in rapid tooling to assist in the
acceleration of Magnetec's(R) product introduction. ExpressTool is building
molds, using its proprietary processes, for a number of Fortune 500 industrial
companies. Its technical capabilities allow molds, mold cavities and other types
of tools to be made more rapidly than is possible with traditional methods. It
has been found that the ExpressTool's molds permit more rapid molding cycles
than conventional tools, a major benefit for the user. The technology was
developed over the last few years under a collaborative R&D agreement with a
major industrial company. Laser Fare has exclusive rights to the technology for
all industries other than the markets its industrial partner competes in.
Management is currently searching for organizations having the needed
capabilities that can be combined, through acquisition or some other business
arrangement, to integrate ExpressTool's new technology with established
infrastructure and business base.
Advanced Technology Group
During the third quarter ending September 30, 1997, Laser Fare's Advanced
Technology Group, ("ATG"), continued work on a $500,000 follow-on contract with
the United States Air Force/Phillips Laboratory, Kirtland AFB, New Mexico. The
contract is focusing on the commercialization of high power diode lasers for
direct materials processing applications. A major part of this Phase II Small
Business Technology Transfer (STTR) program involves the transfer and
commercialization of high power, high brightness diode laser technology, jointly
developed by Laser Fare and the A. F. Yoffe Technical Institute, St. Petersburg,
Russia. Work on this contract is progressing on schedule and may lead to the
introduction of high power, high brightness lasers in a wide range of commercial
applications including marking, micro-welding, micro-machining, desktop
machining and rapid prototyping. This work is also providing the Advanced
Technology Group with increasing access to novel solid state laser technology
within the Commonwealth of Independent States (former Soviet Union). During the
period, the Advanced Technology Group entered into a six month phase one
contractual relationship with Molecular Geodesics Inc. ("MGI"), of Cambridge,
MA. MGI was awarded a $6.4 million Defense Advanced Research Project
Administration (DARPA) contract to develop "bioskins" for the 21st century
soldier for protection against chemical and biological weapons. ATG will use
rapid prototyping techniques to fabricate structures for these "bioskins". Under
this phase I contract, ATG will receive $5,000 a month for its services, and
also received ten thousand stock options in MGI.
<PAGE>
Spectra Science
Infinite Machines owns 2.9 million shares of Spectra Science stock and is
the largest shareholder in this development stage company. Spectra Science was
created to commercialize technology licensed from Brown University on an
exclusive worldwide basis. The LaserPaint(TM) technology allows common,
disordered materials to be generators of laser light. Spectra is currently
focusing its efforts on three areas: Photodynamic Therapy (PDT); Identification
and Coding; and Document Security. In PDT, which is emerging as a treatment
modality for a number of cancers, the LaserPaint(TM) technology addresses the
industry's need for a tunable, low cost and disposable excitation source of
laser light. Spectra Science received positive results from a first round of
invivo tests performed at the Ontario Cancer Institute. The tests were aimed at
comparing the efficacy of Spectra's low-cost disposable light source with a
costly, high-maintenance dye laser now used in photodynamic therapy with the
only FDA approved product.
In the area of coding, Spectra has developed a nylon thread-based label to be
used in conjunction with LaserPaint(TM) for the rental garment and linen
industry. Spectra successfully debuted its patented laser thread identification
system at the "Clean Show '97", the biennial meeting of the World Educational
Congress for Laundering and Drycleaning, in Las Vegas, Nevada. Spectra's
breakthrough technology is the solution to an annual billion-dollar problem in
both the textile rental and industrial linen industries. Attendees included
linen and garment manufacturers and distributors as well as institutional and
industrial users and launderers. Significant orders are anticipated in 1998.
Document security processes using LaserPaint(TM) technology have resulted in
Spectra Science signing a licensing and Research & Development agreement with
Crane & Company Inc., which manufacturers U. S. currency paper.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its product development activities through a
series of private placements of debt and equity securities and through the
October 1993 public offering of its common stock. From inception, through
September 30, 1997, an aggregate of approximately $17.0 million, net of
expenses, has been provided by debt and equity offerings. As of September 30,
1997 the Company has cash, cash equivalents and marketable securities totaling
approximately $1,411,680 available for its working capital needs and planned
capital asset expenditures.
While revenues were realized in the nine months ending September 30, 1997,
the majority of revenues were attributed to Laser Fare. While improved revenue
is anticipated by the Company, and expense containment measures continue to be
implemented, management is nonetheless pursuing other strategies for raising
additional capital through debt and equity transactions.
The Company continues to pursue alternate sources of funding including
conventional bank financing, private placement of debt and/or equity securities,
and application for available
<PAGE>
governmental funds in the form of interest subsidized financing. Management
estimates that a total of $3.0 million in funds would satisfy its cash
requirements for the next 18 months. Based upon management's current estimates,
these funds would be applied to fund continued ExpressTool expansion and for
general working capital purposes, including marketing efforts of the Company's
technologies. There is no assurance, however, that management will be successful
in raising all or part of this amount on satisfactory terms or that it will be
sufficient to fund operations and scheduled debt repayment.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 Compared to Three Months Ended September
30, 1996
Effective September 19, 1997, the Company's voting interest in Spectra
Science was reduced below fifty percent. Prior to this time, the Company's
financial statements were prepared on a consolidated basis which included
Spectra Science as a subsidiary. Effective with this change in interest, the
operating results of Spectra Science will be reported on the Company's financial
statements under the equity accounting method. All comparative financial
information has been restated to reflect this change in reporting entity. There
is no effect on net income or earning per share for the current or any prior
periods due to this change.
Consolidated revenues for the three months ended September 30, 1997 were
$1,361,741 and consisted primarily of Laser Fare sales. Cost of sales totaled
$817,216, and a gross profit of $544,216 was realized for the quarter.
Consolidated revenues for the three months ended September 30, 1996 were
$1,141,026 consisting solely of laser division sales. Cost of sales totaled
$838,461, and a gross profit of $302,565 was realized for the three months ended
September 30, 1996.
Operating expenses for the three months ended September 30, 1997 were
$32,058 as compared to $71,830 for the third quarter of 1996. This decrease was
a result of the Company's costs reduction activities. Research and Development
expenses were $189,785 for the three months ended September 30, 1997. There was
no Research and Development expenses during the third quarter of 1996. The
research and development expenses during the third period of 1997 are for
efforts in the Company's ExpressTool subsidiary.
General and administrative expenses were $391,173 for the three months
ended September 30, 1997 as compared to $259,967 for the third quarter of 1996.
The increase of $131,206 was primarily due to the ExpressTool subsidiary.
Selling expenses were $111,626 for the quarter ended September 30, 1997, as
compared to $127,631 for the third quarter of 1996.
Depreciation and amortization expenses totaled $244,847 for the third
quarter of 1997, as compared to $285,690 for the third quarter of 1996.
Decreased depreciation and amortization expense from the third quarter of 1996,
resulted primarily from the larger amortization expense related to deferred
debenture costs exercised during the third quarter of 1996 as compared to 1997.
Interest expense during the third quarter ended September 30, 1997 was
$101,493 as compared to $1,406,060 for the third quarter of 1996. The decrease
of $1,304,567 was due to the
<PAGE>
reduction in interest expense related to discounts attributed to the beneficial
conversion feature of convertible debentures for the prior period. The Company's
share of equity in loss of unconsolidated subsidiary was $276,251 as compared to
$222,863 for the third quarter of 1996. Loss due to issuance of stock by
unconsolidated subsidiary was $62,341 as compared to zero in the third quarter
of 1996. Interest and other income for the third quarter of 1997 was $33,260.
The Company has a consolidated net loss of $831,789 for the three months
ended September 30, 1997, as compared to the net loss of $2,076,940 for the
three months ended September 30, 1996. The decrease in net loss is primarily
attributed to the reduction in interest expense related to discounts attributed
to the beneficial conversion of convertible debentures for prior periods.
Nine Months Ended September 30, 1997 Compared to the Nine Months
Ended September 30, 1996
Consolidated revenues for the nine months ended September 30, 1997 were
$4,056,124 and consisted primarily of Laser Fare sales. Cost of sales totaled
$2,370,260, and a gross profit of $1,685,864 was realized for the period. For
the nine months ended September 30, 1996, sales totaled $3,735,618 and consisted
solely of laser division sales. Consolidated cost of sales were $2,461,875 for
the first nine months of 1996 and the Company realized a gross profit of
$1,273,743 for that period.
Operating expenses decreased from $127,047 during the first nine months of
1996, to $91,981 for the first nine months of 1997. Research and development
expenses were $660,072 during the first nine months of 1997 as compared to zero
for the nine months ended September 30, 1996. The expenses during the nine
months of 1997 are from efforts in the Company's ExpressTool subsidiary.
General and administration expenses increased to $1,095,971 for the nine
months ended September 30, 1997 from $948,164 for the nine months ended
September 30, 1996. The increase of $147,807 was primarily due to the
ExpressTool subsidiary. Selling expenses were $382,302 for the first nine months
of 1997 as compared to $377,015 for the first nine months of 1996.
Depreciation and amortization expenses totaled $569,274 for the first nine
months of 1997 compared to $590,950 for the first nine months of 1996.
Interest expense was $707,279 for the nine month period ended September
30, 1997 and $1,639,598 during the nine month periods ended September 30, 1997
and 1996, respectively. The decrease in interest expense of $932,319 was due to
the reduction of discount attributable to the beneficial conversion feature of
the convertible debentures in the amount of $406,549 for the nine months ended
September 30, 1997 compared to $392,555 for the nine month period ended
September 30, 1996. The Company's share in equity in net loss of unconsolidated
subsidiary was $1,008,043 for the nine month period ended September 30, 1997, as
compared to $222,863 for the nine months ended September 30, 1996. The increase
in net loss was from Spectra Science, which commenced operations in August,
1996. Loss due to issuance of stock by unconsolidated subsidiary was $62,341 as
compared to zero for nine months ended September 30, 1996.
<PAGE>
The Company had a consolidated net loss of $2,818,012 for the nine months
ended September 30, 1997, as compared to a net loss of $2,600,418 during the
nine months ended September 30, 1996. The increase in net loss was primarily due
to equity in loss of unconsolidated subsidiary, which was approximately $785,000
higher during the nine months ended September 30, 1997, as well as operations of
ExpressTool with recognized operating loss of approximately $677,000, offset by
reductions in interest expense related to recognition of the discount
attributable to the beneficial conversion feature of the convertible debentures
which was approximately $987,000 higher during the nine months ended September
30, 1997, as well as improvement in the operating results of Laser Fare during
1997.
Part II - Other Information
Not Applicable
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.
November 7, 1997 INFINITE MACHINES CORP.
By: /s/ Clifford G. Brockmyre
-----------------------------
Clifford G. Brockmyre, President
And Chief Operating Officer
By: /s/ Daniel T. Landi
-----------------------------
Daniel T. Landi
Chief Financial and Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
FORM 10-QSB, 9/30/97 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,473,280
<SECURITIES> 0
<RECEIVABLES> 815,767
<ALLOWANCES> 38,624
<INVENTORY> 141,448
<CURRENT-ASSETS> 2,586,258
<PP&E> 5,945,484
<DEPRECIATION> 1,795,516
<TOTAL-ASSETS> 8,510,895
<CURRENT-LIABILITIES> 1,738,952
<BONDS> 3,484,510
0
0
<COMMON> 12,461
<OTHER-SE> 3,274,972
<TOTAL-LIABILITY-AND-EQUITY> 8,510,895
<SALES> 4,056,124
<TOTAL-REVENUES> 4,056,124
<CGS> 2,370,260
<TOTAL-COSTS> 2,799,600
<OTHER-EXPENSES> 1,704,276
<LOSS-PROVISION> 21,647
<INTEREST-EXPENSE> 707,276
<INCOME-PRETAX> (2,818,012)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,818,012)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,818,012)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
