UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the nine month period ended: December 31, 1996
Commission File Number: 0-21908
MRS Technology, Inc.
(Exact name of registrant as specified in its charter.)
10 Elizabeth Drive, Chelmsford, MA 01824-4112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508)250-0450
Former name, former address, and former fiscal year, if changed since last
report: Not Applicable
Indicated 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 twelve 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 ( )
Applicable only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Outstanding as of
Class: January 28, 1997:
- ---------------------------- -----------------
Common Stock, par value $.01 6,774,871
<PAGE>
MRS Technology, Inc.
FORM 10-Q
For the nine month period ended December 31, 1996
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at
December 31, 1996 (Unaudited) and March 31, 1996
Consolidated Statements of Operations for the
Three months ended December 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Operations for the
Nine months ended December 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows for the
Nine months ended December 31, 1996 and 1995 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
Part I Financial Information
Item 1. Financial Statements MRS Technology, Inc.
Consolidated Balance Sheets
Assets Dec. 31, 1996
Current assets (Unaudited) March 31, 1996
<S> <C> <C>
Cash and cash equivalents $ 1,633,132 $ 4,217,880
Accounts receivable, net 2,628,352 1,116,981
Inventories 7,166,673 8,093,014
Deposits 367,057 1,024,551
Other current assets 146,095 95,634
- --------------------------------------------------------------------
Total current assets 11,941,309 14,548,060
Property and equipment, net 616,592 1,017,266
Assets held for lease, net 0 696,808
Other assets, net 37,364 38,948
- --------------------------------------------------------------------
Total assets $12,595,265 $16,301,082
====================================================================
<CAPTION>
Current liabilities
<S> <C> <C>
Accounts payable $ 564,442 $ 1,867,756
Accrued expenses 1,105,649 1,456,975
Current portion of obligations
under capital leases 2,383 3,839
Customer deposits 1,032,515 0
Other liabilities 141,157 97,524
- --------------------------------------------------------------------
Total current liabilities 2,846,146 3,426,094
Long-term portion of obligations
under capital leases 9,792 11,165
- --------------------------------------------------------------------
Total liabilities 2,855,938 3,437,259
Stockholders' equity
Common stock, $.01 par value; authorized, 20,000,000 shares;
issued and outstanding 6,772,041 and
6,674,320 shares respectively 67,720 66,743
Additional paid-in capital 36,376,466 36,246,889
Accumulated deficit (26,704,859) (23,449,809)
- --------------------------------------------------------------------
Total stockholders' equity 9,739,327 12,863,823
- --------------------------------------------------------------------
Total liabilities and stockholders'
equity $12,595,265 $16,301,082
====================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MRS Technology, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months ended Dec. 31,
Revenues 1996 1995
<S> <C> <C>
Product $1,587,595 $1,073,461
Contract research 0 653,505
--------- ----------
Total revenues 1,587,595 1,726,966
Cost of revenues
Product 1,438,013 884,428
Contract research 0 693,739
--------- ----------
Total cost of revenues 1,438,013 1,578,167
Gross profit 149,582 148,799
Operating expenses:
Research and development (Note 1) 832,191 552,500
Selling, general and administrative 715,528 923,752
--------- ----------
Loss from operations (1,398,137) (1,327,453)
Interest income, net 24,252 63,622
Interest expense 150 0
--------- ----------
Loss before provision for
income taxes (1,374,035) (1,263,831)
- -----------------------------------------------------------------------
Net loss ($1,374,035) ($1,263,831)
=======================================================================
Net loss per share ($0.20) ($0.19)
Weighted average number of common
shares outstanding (000's) 6,675 6,583
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MRS Technology, Inc.
Consolidated Statements of Operations
(Unaudited)
Nine months ended Dec. 31,
Revenues 1996 1995
<S> <C> <C>
Product $6,207,082 $7,155,813
Contract research 578,483 2,134,431
--------- ---------
Total revenues 6,785,565 9,290,244
Cost of revenues
Product 5,054,907 5,076,119
Contract research 578,493 2,174,665
--------- ---------
Total cost of revenues 5,633,400 7,250,784
Gross profit 1,152,165 2,039,460
Operating expenses:
Research and development (Note 1) 2,328,006 1,555,466
Selling, general and administrative 2,170,373 2,943,841
--------- ---------
Loss from operations (3,346,214) (2,459,847)
Interest income, net 98,511 263,599
Interest expense 539 0
Other income (expense), net (816) 0
---------- ---------
Loss before provision for
income taxes (3,249,058) (2,196,248)
- ------------------------------------------------------------------------
Net loss ($3,249,058) ($2,196,248)
========================================================================
Net loss per share ($0.48) ($0.33)
Weighted average number of common
shares outstanding (000's) 6,705 6,626
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MRS Technology, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine month period ended Dec. 31,
1996 1995
Cash flows from operating activities
<S> <C> <C>
Net loss ($3,249,058) ($2,196,248)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation 517,645 511,781
Amortization 1,674 43,339
Changes in assets and liabilities
Accounts receivable (1,511,371) 3,518,339
Inventories 926,341 (2,415,748)
Deposits and other assets 608,617 576,298
Accounts payable (1,303,314) (779,210)
Accrued expenses 351,326 (260,334)
Customer deposits from other 1,032,515 (840,000)
Other current liabilities 43,633 0
- -------------------------------------------------------------------------
Net cash used in operating activities (2,581,992) (1,841,783)
Cash flows from investing activities
Capital expenditures (130,481) (409,269)
Investment in business alliance 0 (1,000,000)
- -------------------------------------------------------------------------
Net cash used in investing activities (130,481) (1,409,269)
Cash flows from financing activities
Proceeds from stock purchases under
employee stock purchase plan 65,332 86,753
Proceeds from employee stock option
exercise 65,222 109,124
Principal payments under capital
lease obligations (2,829) (6,338)
----------------------------------------------------------------------
Net cash provided by financing activities 127,725 189,539
Net decrease in cash & equivalents (2,584,748) (3,061,513)
Cash and cash equivalents at beginning
of period 4,217,880 8,340,166
Cash and cash equivalents at end
of period $1,633,132 $5,278,653
=======================================================================
Supplemental cash flow information
Interest paid $540 $9,985
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
MRS Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The financial statements for the three and nine month periods ended
December 31, 1996 and 1995 are unaudited and include all adjustments
which, in the opinion of management, are necessary to present fairly the
financial position at December 31, 1996 and the results of operations and
cash flows for the periods then ended. All such adjustments are of a
normal recurring nature. These financial statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's Form 10-K for the fiscal year ended March 31, 1996.
Certain information and footnote disclosures normally included in the
financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission applicable
to quarterly reports on Form 10-Q, although the Company believes the
disclosures in these financial statements are adequate to make the
information presented not misleading.
The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any
other interim period or for a full fiscal year.
1. Research and Development
Research and product development costs are expensed as incurred. For the
nine month periods ended December 31, 1996 and 1995, aggregate research
and product development costs were $2,816,000 and $3,614,000 respectively
including $488,000 and $2,059,000 of costs recovered under research and
development contracts. For the three month periods ended December 31,
1996 and 1995, aggregate research and product development costs were
$832,000 and $1,132,000, respectively, including $0 and $580,000
respectively, of costs recovered under a research and development contract
which ended in the third quarter of fiscal 1997.
<TABLE>
<CAPTION>
2. Inventories
Inventories consist of the following as of December 31, 1996 and March 31,
1996:
(In Thousands) December 31, 1996 March 31, 1996
<S> <C> <C>
Work in process $6,608 $7,622
Purchased parts 559 471
------ ------
$7,167 $8,093
</TABLE>
<PAGE>
3. Net Loss Per Common Share
Net loss per common share for the three and nine months ended December 31,
1996 and 1995 are computed based upon the weighted average number of
common shares outstanding. In accordance with the treasury stock method
net income per share is calculated based upon the weighted average number
of common shares outstanding. Common equivalent shares are not included
in loss periods as their effect would be antidilutive.
4. Legal Proceedings
In July 1996, the Company sold a PanelPrinter to Micron Display
Technology, Inc., an Idaho corporation ("MDT"). The first three payments,
totaling $1,032 million were made on schedule. The remaining payments due
under the sales contract were not made, and the Company pursued
negotiations with MDT in November and December, 1996 and January, 1997, in
an unsuccessful effort to obtain payment. On January 24, 1997, MDT filed
a complaint in an Ada County, Idaho state court, alleging defects in the
PanelPrinter and seeking damages in an amount exceeding $1.032 million,
plus punitive damages and attorneys' fees. The Company received copies of
the Idaho complaint on or about January 29, 1997, and expects to file
responsive pleadings on or before February 18, 1997. On January 30, 1997
the Company filed a complaint against MDT in the United States District
Court for the District of Massachusetts, seeking damages for breach of
contract of $1.418 million, incidental damages, and multiple damages and
attorneys' fees under Massachusetts General Laws chapter 93A. MDT
acknowledged receipt of the summons and complaint with respect to the
Massachusetts action of February 5, 1997.
The Company intends vigorously to prosecute its claims against MDT, and to
defend MDT's claims against it.
The Company has not recorded any provision with respect to this matter.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 ("the Act") provides
a "safe harbor" for forward-looking statements so long as those statements
are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could cause
actual results to differ materially from those discussed in the statement.
The Company desires to take advantage of the "safe harbor" provisions of
the Act. Certain information contained herein, particularly the
information appearing under the headings "Business," "Results of
Operations," "Financial Condition" and "Factors Affecting Future Results"
are forward-looking. Information regarding certain important factors that
could cause actual results of operations or outcomes of other events to
differ materially from any such forward-looking statement appear together
with such statement, and/or elsewhere herein.
<PAGE>
Overview
The Company's ability to obtain product orders and subsequent revenue and
profitability is not certain. If the Company is not successful in its
efforts to obtain product orders, the Company intends to take more
aggressive steps to manage its cash flow in order to maintain liquidity.
Such steps may include further work force reductions and further decreases
in discretionary spending.
Additionally, the Company continues to seek strategic relationships with
companies which would enhance its ability to commercialize the technology
it has developed, strengthen its balance sheet and maximize its long-term
prospects for success. The specific types of transactions under
consideration include equity investments (minority or controlling), debt
facilities, research contracts, equipment purchase commitments, or any
combination of these transactions. The Company is committed to pursuing a
strategy which would maximize its long-term prospects for success and
increase shareholder value.
There is no assurance that any actions taken to manage existing cash flows
will be successful or that, should it choose to do so, the Company will be
successful in any attempts to enter into a satisfactory strategic
relationship. If any such efforts are not successful liquidity would be
adversely affected.
RESULTS OF OPERATIONS
TOTAL REVENUES
Consolidated revenues for the fiscal quarters ended December 31, 1996 and
1995 were $1.6 million and $1.7 million, respectively, a decrease of $0.1
million. For the nine month period ended December 31, 1996 and 1995
consolidated revenues were $6.8 and $9.3 million, respectively. Total
revenues for the first nine months decreased $2.5 million from total
revenues for the comparable period in the preceding fiscal year.
Product revenues for the fiscal quarters ended December 31, 1996 and 1995,
were $1.6 and $1.1 million, respectively an increase of $0.5 million
quarter to quarter. This increase was attributable to revenues from the
shipment of a specifically reconfigured PanelPrinter to a customer, spares
and service contract revenue in the current quarter whereas product
revenues for the same quarter last year were derived from a substantial
amount of service work.
Total product revenues for the first three quarters of fiscal 1997
decreased by $1.0 million from $7.2 million during the first three
quarters of fiscal 1996. This decrease was due to the shipment of two
PanelPrinters, one of which was specifically reconfigured and a 1 Micron
lens upgrade to a PanelPrinter already installed in the fiscal 1997 three
quarter period compared to the sale of two full value PanelPrinters and a
substantial amount of service work in the same three quarter period of
fiscal 1996.
<PAGE>
Contract research revenue for the first three quarterly periods ended
December 31, 1996 and 1995 was $0.6 and $2.1 million, respectively,
representing a decrease of $1.5 million year to year. Contract research
revenue for the quarters ended December 31, 1996 and 1995 was zero and
$0.7 million, respectively. These decreases were due to the reduced
efforts on the Defense Advanced Research Projects Agency (DARPA) project
which ended in the third quarter of fiscal 1997.
GROSS PROFIT
Gross profit as a percentage of total revenues was 9% for both quarterly
periods ended December 31, 1996 and 1995, and was 17% and 22% for the nine
month periods ended December 31, 1996 and 1995, respectively. Product
related gross margins decreased 9% for the quarter ended December 31, 1996
compared to the same period in 1995. The decrease in product gross margin
for the three month period was primarily due to the lower gross margins
associated with the sale of the reconfigured PanelPrinter in the current
three month period. Product related gross margins decreased 10% for the
nine month period ended December 31, 1996 compared to the same period in
1995. The decrease was also attributable to lower gross margins
associated with the sale of the reconfigured PanelPrinter in the current
nine month period compared to the two full systems in the same nine month
period last year which have higher gross margins.
Contract research gross margin for the three and nine months ended
December 31, 1996 were both zero due to no billings in the current year as
the current DARPA contract was a fixed price contract with no additional
fee to be billed. For the three and nine month periods ending December
31, 1995 the gross margin was negative due to the cancellation of two
tasks from the contract with associated fees that were reversed.
OPERATING EXPENSES
Research and development includes expenses incurred in support of internal
development programs and not allocable to customer funded contract
research.
Research and development expenses for the three month periods ended
December 31, 1996 and 1995 were $0.8 million and $0.6 million,
respectively. Aggregate research and development spending before
allocation to cost of contract research revenue was $0.8 million and $1.1
million respectively, for the same quarterly periods. This $0.2 million
increase in spending was primarily a result of lower aggregate costs,
across all expense categories, offset by significantly lower amounts
allocable to the DARPA contract in the quarter ended December 31, 1996
compared to the quarter ended December 31, 1995. For the nine month
periods ended December 31, 1996 and 1995 research and development expenses
were $2.3 and $1.6 million, respectively. Aggregate expenses before
allocation to cost of contract research was $2.8 and $3.6 million,
respectively. The $0.7 million increase for the nine month period was
attributable to a lower level of work as the contract reached completion.
<PAGE>
Selling, general and administrative expenses for the three months ended
December 31, 1996 and 1995 were $0.7 and $0.9 million, respectively. For
the nine month periods ended December 31, 1996 and 1995 expenses were $2.2
and $2.9 million, respectively. This decrease of $0.2 million for the
quarter and $0.7 for the nine month period was primarily attributable to
continued efforts to manage expenses and also reflects an unfavorable
DARPA rate adjustment in the quarter ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents at December 31, 1996 of $1.6
million, a decrease of $2.6 million from the March 31, 1996 balance of
$4.2 million. The decrease in cash is primarily due to the loss from
operations in the first nine months of fiscal 1997. The Company believes
that it's current cash, cash equivalents and current receivables are
sufficient to meet its requirements through the first quarter of fiscal
1998.
Development efforts under the DARPA contact required increases in certain
resource levels as activity peaked at various phases of that project. To
the extent possible, the Company used temporary and contract resources to
meet these peak efforts. It is unlikely that any substantial follow-on
funding will be available from DARPA for fully commercializing the
technology developed under the DARPA contract. The Company is seeking
industrial partners who, through beta-site purchases, contract research
funding, minority equity investments, or any combination of these, would
provide the funding for this technology to reach its full commercial
potential as a product used extensively in high-volume manufacturing
applications. To date such funding has not been obtained and as a result
steps were taken in January, 1997 to cut the Company expense rate
significantly. These expense reductions relate mostly to longer term
projects and will allow the Company to focus on near term opportunities.
Additionally, the Company continues to seek strategic relationships with
companies which would enhance its ability to commercialize the technology
it has developed, strengthen its balance sheet and maximize its long-term
prospects for success. The specific types of transactions under
consideration include equity investments (minority or controlling), debt
facilities, research contracts, equipment purchase commitments, or any
combination of these transactions. The Company is committed to pursuing a
strategy which would maximize its long-term prospects for success and
increase shareholder value.
There is no assurance that any actions taken to manage existing cash flows
will be successful or that, should it choose to do so, the Company will be
successful in any attempts to enter into a satisfactory strategic
relationship. If any such efforts are not successful liquidity would be
adversely affected.
The Company presently has available from a venture leasing company a $1.0
million lease line, which is collateralized by the equipment leased. As
of December 31, 1996, this line remains unused.
<PAGE>
SIGNIFICANT RISKS AND UNCERTAINTIES
The ability of the Company to attain the financial or other results that
may be planned, forecasted or projected from time to time is subject to a
number or risk factors, including the ability to obtain new orders and
subsequent revenue, the ability to develop and make new products, the
ability to respond to competitive technology and pricing pressures,
adequate availability of major components, the ability to maintain key
employees for hardware, software, motions and imaging technicians,
economic conditions in both the United States and international markets,
delays in revenue recognition or contract performance or the inability to
obtain new research and development contracts to cover the current level
of expenses after completion of the current DARPA contract. The Company
may fail to meet any such planned, forecasted or projected results for
other reasons than those set forth above.
Product Revenue. PanelPrinters and optional equipment generally have
ranged in price from $1.8 to $3.0 million and any delay in revenue
recognition or cancellation of an order would adversely affect the
Company's results of operations, cash flows, or both. Fluctuations in
product revenues and consequently quarterly net income or loss, are
largely related to revenue recognition on sales of PanelPrinter units.
The Company continues to see an increasing number or prospects, but the
process for turning these into firm purchasing commitments which can be
disclosed is often lengthy.
Contract Research. A significant portion of the Company's revenue has been
derived from research and development contracts with governmental, and in
prior years, commercial entities. The most significant of these research
funding sources has been DARPA. During fiscal 1996, the Company funded
approximately 54% of its aggregate research costs through the government
research contract. The Company would like to continue to fund part of its
research and development efforts through such contracts. However, there
are no assurances that the Company will be successful in obtaining such
contracts. The current DARPA contract was completed in the third quarter
of fiscal 1997 and substantially all the revenue to be recognized in
fiscal 1997 on the DARPA contract has been recognized.
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
In July 1996, the Company sold a PanelPrinter to Micron Display
Technology, Inc., an Idaho corporation ("MDT"). The first three payments,
totaling $1,032 million were made on schedule. The remaining payments due
under the sales contract were not made, and the Company pursued
negotiations with MDT in November and December, 1996 and January, 1997, in
an unsuccessful effort to obtain payment. On January 24, 1997, MDT filed
a complaint in an Ada County, Idaho state court, alleging defects in the
PanelPrinter and seeking damages in an amount exceeding $1.032 million,
plus punitive damages and attorneys' fees. The Company received copies of
the Idaho complaint on or about January 29, 1997, and expects to file
responsive pleadings on or before February 18, 1997. On January 30, 1997
the Company filed a complaint against MDT in the United States District
Court for the District of Massachusetts, seeking damages for breach of
contract of $1.418 million, incidental damages, and multiple damages and
attorneys' fees under Massachusetts General Laws chapter 93A. MDT
acknowledged receipt of the summons and complaint with respect to the
Massachusetts action of February 5, 1997.
The Company intends vigorously to prosecute its claims against MDT, and to
defend MDT's claims against it.
Item 5. Other Information
Board of Directors:
One member of the Board has resigned due to his becoming and equity
partner in a firm which restricts board participation in a "for profit"
corporation.
Integrated Circuit Testing GmbH (ICT)
ICT was a joint venture owned by Siemens, Advantest, MRS Technology and a
group of founding employees. On October 8, 1996 ICT was acquired by Opal
for $4.5 million. Prior to the acquisition a business unit of ICT,
Ebetech Electron-Beam Technology GmbH, was spun off forming a newly
independent company located in Munich, Germany. Ebetech is engaged in the
development and production of focused electron-beam test systems for flat
panel displays (FPDs) and related circuits-on-glass electronics
components.
ICT was a German company involved in the development and manufacture of
products based on electron beam technology the Company owned 10% of ICT.
Pursuant to a set of agreements, dated as of 19 October 1994, between ICT
and the Company, the Company returned to ICT certain rights (the
"Distribution Rights") to distribute test systems for Flat Panel Display
("FPD") and multichip module production to facilitate the spin out of this
product line from ICT.
On October 8, 1996, ICT was acquired by Opal, for approximately $4.5
million. Prior to the acquisition, a business unit of ICT, EBETECH
Electron-Beam Technology Gmbh ("EBETECH"), was spun off from ICT and
became an independent company of which the Company owns 33%, Siemens AG
owns 49% and EBETECH management owns 18%. In connection with the spin-off
ICT transferred to EBETECH, with the Company's consent, all of ICT's
rights and obligations relating to the Distribution Rights. EBETECH,
which is located in Munich, Germany, is engaged in the development and
production of focused-electron-beam test systems for FPDs and related
circuits-on-glass electronics components.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 17 Member, Board of Directors letter of resignation
Exhibit 27. Financial Data Schedule
Exhibit 99.01 ICT/MRS Agreement Transfer of distribution rights
Exhibit 99.02 Business Agreement MRS/ICT
b. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, authorized officers.
MRS Technology, Inc.
Date: February 10, 1997 /s/Griffith L. Resor, III
Griffith L. Resor, III
President, CEO and Director
(Principal Executive Officer)
Date: February 10, 1997 /s/ Patricia F. DiIanni
Patricia F. DiIanni
Treasurer, Chief Financial Officer
(Principal Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form
10-K for the fiscal year ended March 31, 1996.
</LEGEND>
<CIK> 0000906768
<NAME> MRS TECHNOLOGY, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,633,132
<SECURITIES> 0
<RECEIVABLES> 2,649,643
<ALLOWANCES> 0
<INVENTORY> 7,166,673
<CURRENT-ASSETS> 11,941,309
<PP&E> 3,878,921
<DEPRECIATION> 3,262,329
<TOTAL-ASSETS> 12,595,265
<CURRENT-LIABILITIES> 2,846,146
<BONDS> 0
0
0
<COMMON> 67,720
<OTHER-SE> 9,671,607
<TOTAL-LIABILITY-AND-EQUITY> 12,595,265
<SALES> 6,207,082
<TOTAL-REVENUES> 6,785,565
<CGS> 5,054,907
<TOTAL-COSTS> 5,633,400
<OTHER-EXPENSES> 816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 539
<INCOME-PRETAX> (3,249,058)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,249,058)
<EPS-PRIMARY> ($0.48)
<EPS-DILUTED> ($0.48)
</TABLE>
Letterhead
CRAIG
Griff Resor
MRS Technology, Inc.
10 Elizabeth Drive
Chelmsford, MA 01824
Dear Griff,
As I mentioned to Jack Steele, I have become an Equity Partner at
Andersen Consulting. Unfortunately, partnership rules preclude a
partner from being a Director of a "for Profit" entity, apart
from a closely held family enterprise. Consequently, I hereby
resign as chairman of the Compensation Committee and a Director
of MRS. As Jack knows, I will be in Asia through 1 October, but
I will be in touch upon my return.
Most Sincerely,
/s/ S. Russel Craig
Agreement on the Transfer of Distribution Rights between
ICT Integrated Circuit Testing
Gesellschaft fur Halbleiterpruftechnik mbH,
EBETECH Electron-Beam Technology Vertriebs GmbH
and
MRS Technology Inc., Chelmsford, Massachusetts, USA
Preamble
According to the Business Agreement as of 19 October 1994 between ICT
Intetegrated Circuit Testing Gesellschaft fur Halbleiterpruftechnik mbH
("ICT") and MRS Technology, Inc. ("MRS") ICT has sold to MRS distribution
rights for electronbeam components and systems for the Flat Panel Display
and Multi-chip module production developed by ICT and MRS (Supply,
Distribution and Licensing Agreement). According to the shareholders'
resolution in the Memorandum of Understanding as of 3 July 1995 these
distribution rights have been extended under Clause 6 of the Memorandum of
Understanding.
This Agreement is based on the Business Agreement as of 19 October 1994 as
well as the Memorandum of Understanding as of 3 July 1995.
25. September 1996
CR/bre/win/M
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Section 1 Transfer of Distribution Rights
The parties agree that the distribution rights sold to MRS, described in
the "Supply, Distribution and Licensing Agreement" as of 19 October 1994
in more detail, are transferred to EBETECH Eletron-Beam Technology
Vertriebs GmbH ("EBETECH") according to the conditions stipulated in the
contracts as of 19 October 1994 and in the Memorandum of Understanding as
of 3 July 1995, unless this Agreement determined anything to the contrary.
The Business Agreement concluded between ICT and MRS is, therefore,
amended that with effect of this Agreement EBETECH is the holder of the
distribution rights for the elctron beam components and systems for the
Flat Panel Display and Multichip module production.
Section 2 Purchase Price
For the transfer of the distribution rights including the extention by the
Memorandum of Understanding MRS shall receive a purchase price of DM
210,000.00 (In words: Deutsche Mark two hundred and ten thousand). The
amount shall not be immediately due for payment.
Section 3 Maturity
The amount shall be due for payment on the following alternative
preconditions:
a) EBETECH sells one or two of the 2 "LCD testers"; in this case 50% of
the liability arising from this contract under section 2 will fall due,
i.e. EBETECH will pay 50% of the purchase price under section 2 to MRS
within 10 days cash is received by EBETECH.
b) The shares in EBETECH are transferred to a third party. In this case
the total purchase price (less any payments made under Section 3 a) for
the transfer of the distribution rights under section 2 must be assumed by
the buyer of the shares in EBETECH and paid by EBETECH to MRS.
Section 4 Consent
The consent to the transfer of Business Agreement between ICT and MRS as
of October 19, 1994 including all rights involved to EBETECH is granted.
Section 5 Miscellaneous
Should some of the provisions of this agreement be ineffective or not
feasible, this shall not affect the effectiveness and feasibility of the
other provisions as a whole. The ineffective or not feasible provisions
shall be replaced by such provisions which come closest to the economic
purpose to the ineffective or not feasible provisions.
25.September 1996
CR/bre/win/M
Munich/Chelmsford this 26 day of September 1996.
/s/Dr. Hans-Peter Feuerbaum
ICT Integrated Circuit Testing
Gesellschaft fur Halbleiterpruftachnik
mbH
/s/Peter Fazekas
ICT Integrated Circuit Testing
Gesellschaft fur Halbleiterpruftachnik
mbH
/s/Dr. Brunner
EBETECH Electron-Beam Technology
Vertriebs GmbH
/s/Richard Haas
EBETECH Electron-Beam Technology
Vertriebs GmbH
/s/John L.Steele
MRS Technology, Inc., Chelmsford
25.September 1996
CR/bre/win/M
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ICT Integrated Circuit Testing GmbH Letterhead
MRS Technology, Inc.
10 Elizabeth Drive
Chelmsford, MA 01824-4112
USA
Attn..: Jack Steele, Vice President
Bearbeiter: R. L. Haas
Durchwahl: 089-909994-12
Datum: 30.September 1996
Business Agreement between MRS and ICT dated October 19th, 1994.
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Dear Mr. Steele,
the Agreement on the Transfer of Distribution Rights between ICT
Integrated Circuit Testing Gesellschaft fur Halbleiterpruftechnik
mbH, Heimstetten and EBETECH Electron-Beam Technology Vertriebs
GmbH, Heimstetten as well as with MRS Technology, Inc.,
Chelmsford, MA illustrates the consent of all parties to the
transfer of the Distribution Rights from MRS to EBETECH.
1. These Distribution Rights were part of a whole set of
contractual transactions between ICT and MRS on the Business
Agreement and its associated other agreements as of October 19th,
1994. Along with the above mentioned Agreement on the Transfer
of Distribution Rights, this letter proposes to settle a part of
these contractual transactions which still are to be fulfilled
under the terms and provisions of the above mentioned Business
Agreement.
2. The provisions under section 3.4 of said Business Agreement
which specify ICT's obligation to deliver two Beta Tester Units
and MRS's obligation to accept these two Beta Tester Units and
pay for them will be considered fulfilled and are herewith
waived.
3. The payment by MRS of the aggregate purchase price for two
Beta Tester Units amounting to US$ 1,000,000,-- (DM 1.484.900,--)
is owed now by EBETECH to MRS according to the Purchase Agreement
between ICT and EBETECH as of September 26th, 1996. It is agreed
upon that this prepayment deposit is considered as the purchase
price for the two Beta Tester Units owed to MRS by EBETECH. This
purchase price is not to be paid by EBETECH immediately but can
be discharged by future net sales proceeds received by EBETECH.
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4. ICT hereby revokes and terminates the warrant it holds
pursuant to the Warrant Issuance Agreement which is part of the
above mentioned Business Agreement.
Please confirm the above mentioned letter agreement by your
signature below and return this letter by Fax. Thank you for
your efforts.
Signed and approved as of date of this letter,
ICT Integrated Circuit Testing Gesellschaft fur
Halbleiterpruftechnik mbH
/s/Dr. Hans-Peter Feuerbaum
/s/Peter Fazekas
EBETECH Electron-Beam Technology
Vertriebs GmbH
/s/ Richard L.Haas
MRS Technology, Inc.
/s/ John L.Steele, Jr.
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