SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required)
For the transition period from ______________ to _________________
Commission file number 1-13400
STRATASYS, INC.
(Name of Small Business Issuer in Its charter)
Delaware 36-3658792
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
14950 Martin Drive, Eden Prairie, Minnesota 55344
(Address of Principal Executive Offices)
(612) 937-3000
(Issuer's Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 past 90 days.
Yes __X__ No _____
As of November 8, 1996, the Issuer had 5,506,247 shares of Common Stock,
$.01 par value, outstanding.
Transitional Small Business Disclosure Format:
Yes _____ No __X__
Stratasys, Inc.
Index
Part I. Financial Information
Item 1. Financial Statements Page
Balance Sheets as of September 30, 1996 and
December 31, 1995. . . . . . . . . . . . . . . . . . . . . .1
Statements of Operations for the three months and
nine months ended September 30, 1996 and 1995. . . . . . . .2
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 . . . . . . . . . . . . . . . . .3
Notes to Financial Statements . . . . . . . . . . . . . . . .4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . .5
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . .9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STRATASYS, INC.
BALANCE SHEETS
- -------------------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED) (AUDITED)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,902,911 $ 4,726,056
Marketable securities 6,555,828 6,309,048
Accounts receivable, less allowance for doubtful
accounts of $130,000 in 1996 and 1995 4,702,053 2,769,010
Inventories 3,126,903 907,319
Prepaid expenses 208,866 119,423
------------ ------------
Total current assets 20,496,561 14,830,856
------------ ------------
MACHINERY AND EQUIPMENT, less
accumulated depreciation 1,852,372 1,112,328
------------ ------------
OTHER ASSETS
Deposits 52,124 41,124
Intangible assets 4,217,702 3,910,960
------------ ------------
4,269,826 3,952,084
------------ ------------
$ 26,618,759 $ 19,895,268
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Obligations under capitalized leases, current portion $ 178,165 $ 157,449
Accounts payable and other current liabilities 2,154,046 1,661,517
Unearned maintenance revenue 729,723 371,570
------------ ------------
Total current liabilities 3,061,934 2,190,536
------------ ------------
OBLIGATIONS UNDER CAPITALIZED LEASES, less current portion 166,797 182,520
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock, Series A, voting, $.01 par value,
authorized, issued and outstanding 264,000 shares 2,640
Common Stock, $.01 par value, authorized 15,000,000
shares, issued and outstanding 5,496,054 shares
in 1996 and 4,233,876 shares in 1995 54,961 42,339
Capital in excess of par value 27,235,517 22,024,604
Accumulated deficit (3,900,450) (4,547,371)
------------ ------------
Total Stockholders' Equity 23,390,028 17,522,212
------------ ------------
$ 26,618,759 $ 19,895,268
============ ============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
STRATASYS, INC.
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 4,402,436 $ 2,292,369 $ 12,471,780 $ 6,111,468
COST OF GOODS SOLD 1,497,420 785,592 4,276,124 2,234,488
------------ ------------ ------------ ------------
GROSS PROFIT 2,905,016 1,506,777 8,195,656 3,876,980
============ ============ ============ ============
COSTS AND EXPENSES
Research and development 771,651 405,281 2,207,918 1,357,048
Selling, general and administrative 2,223,099 1,105,733 5,741,090 2,759,342
------------ ------------ ------------ ------------
2,994,750 1,511,014 7,949,008 4,116,390
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) (89,734) (4,237) 246,648 (239,410)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 163,669 59,586 429,053 152,969
Interest expense (10,088) (6,351) (28,780) (37,446)
------------ ------------ ------------ ------------
153,581 53,235 400,273 115,523
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 63,847 $ 48,998 $ 646,921 $ (123,887)
============ ============ ============ ============
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
Primary $ 0.01 $ 0.01 $ 0.12 $ (0.04)
============ ============ ============ ============
Fully diluted $ 0.01 $ 0.01 $ 0.11 $ (0.04)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING
Primary 5,888,942 4,756,965 5,607,803 3,488,980
============ ============ ============ ============
Fully diluted 6,032,767 4,793,107 5,837,264 3,488,980
============ ============ ============ ============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
STRATASYS, INC.
STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 646,921 $ (123,887)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 319,271 159,388
Amortization of intangibles and other assets 444,793 145,076
Bad debts 52,100
Increase (decrease) in cash attributable to
changes in assets and liabilities
Accounts receivable (1,933,043) (565,481)
Inventory (2,369,584) (475,979)
Prepaid expenses (89,443) (65,373)
Accounts payable and other current liabilities 492,529 586,599
Advance deposits from customers (24,500)
Unearned maintenance revenue 358,153 148,706
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,130,403) (163,351)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of marketable securities (246,780)
Proceeds from the sale of machinery and equipment 40,775
Acquisition of machinery and equipment (789,303) (654,881)
Payments of deposits, net (11,000) (14,518)
Payments for intangible assets (751,535) (847,132)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,798,618) (1,475,756)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of obligations under capitalized leases (115,019) (137,933)
Proceeds from the sale of common stock 3,274,895 4,175,529
Proceeds from notes due on common stock purchases 1,946,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,105,876 4,037,596
----------- -----------
NET INCREASE IN CASH 1,176,855 2,398,489
CASH AND CASH EQUIVALENTS, beginning of period 4,726,056 4,635,209
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 5,902,911 $ 7,033,698
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
cash paid during the period for interest $ 28,780 $ 37,446
=========== ===========
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Common stock issued in exchange for notes receivable $ 1,946,000 $ --
=========== ===========
Common stock issued in exchange for preferred stock outstanding $ 3,794 $ --
=========== ===========
Capital lease agreements incurred for the acquisition of machinery
and equipment $ 120,012 $ 363,602
----------- -----------
Common stock issued for the acquisition of intangible assets $ -- $ 2,500,000
=========== ===========
See notes to financial statements
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The financial information herein is unaudited; however, such information
reflects all adjustments (consisting of normal, recurring adjustments) which
are, in the opinion of management, necessary for a fair statement of results for
the interim period. The results of operations for the three months ended
September 30, 1996 and the nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year. Certain
financial information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The reader is referred to the audited financial
statements and notes thereto for the year ended December 31, 1995, filed as part
of the Company's Annual Report on Form 10-KSB for such year.
Note 2 -- Common Stock
In January 1996, the Company's sole preferred stockholder converted all
264,000 issued and outstanding shares of the Company's preferred stock into
379,437 shares of its common stock.
In the nine months ended September 30, 1996, the Company received net
proceeds of approximately $3,275,000 from the exercise of 253,450 warrants at
prices ranging from $3.00 to $18.00 per share and 227,291 options at prices
ranging from $1.59 to $7.00 per share.
In May 1996, the Company issued 400,000 shares of the Company's common
stock upon exercise of warrants at prices ranging from $3.00 to $8.00 per share,
and in lieu of cash, the Company received notes for the exercise price of the
stock plus interest at a rate of prime plus 5%. The notes were collaterized by
50% of the shares issued. These notes were fully paid.
Note 3 -- Facility
In March 1996, the Company took possession of 4,752 square feet of
additional office and production space as part of an amended lease agreement
with its present landlord. Future minimum lease payments will be increased
annually by approximately $39,000. In October 1996, the Company took possession
of 5,602 square feet of additional office and production space under an amended
lease. Future minimum lease payments will be increased annually by approximately
$41,000.
Note 4 -- Production equipment
In October 1996, the Company entered into a capital lease agreement for the
purchase of production equipment. The lease term is for 3 years with minimum
lease payments of approximately $53,000 per year.
Note 5 -- Subsequent Event
In October 1996, the Company executed a letter of intent to lease 59,400
square feet of combined office and warehouse in a facility adjacent to the
Company's present facility. Future minimum lease payments will be increased
annually by approximately $252,000. The Company intends to sublease
approximately 50% of this space, 14,000 square feet of which will be subleased
immediately with minimum annual lease revenue of approximately $84,000. An
estimated $225,000 of leasehold improvements will be required to retrofit the
facility, $45,000 of which will be reimbursed by the Landlord.
In October and November 1996 the Company signed material commitments with
several vendors for new product development projects expected to be incurred
over the next three to six months. These commitments amounted to approximately
$400,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THE THREE MONTHS ENDED
SEPTEMBER 30, 1995.
Sales for the three months ended September 30, 1996 totaled $4,402,436
compared with sales of $2,292,369 recorded in the three months ended September
30, 1995, an increase of $2,110,067, or 92.0%. The increase over the comparable
1995 period was attributable to the continued sales growth of the Company's
FDM(R) 1650 series of rapid prototyping systems combined with additional revenue
from the Genisys(TM) 3D Printer. The FDM 1650, which was introduced in March
1996, replaced the FDM 1600 and offers multiple engineering materials, including
ABS, combined with significant improvements in through-put. The Company began
shipments of the Genisys product in the second quarter of 1996 and has increased
shipments to its resellers in the third quarter. Gross margins increased by
$1,398,239, or 92.8%, to $2,905,016 for the three months ended September 30,
1996, from $1,506,777 for the three months ended September 30, 1995. As a
percentage of sales, gross margins improved to 66.0% for the three months ended
September 30, 1996, as compared with 65.7% for the three months ended September
30, 1995. The improvement to the Company's gross margin was largely due to
reductions in material costs combined with a higher selling price for the
Company's FDM 1650 product. The cost reductions were achieved through both
engineering design changes as well as purchasing efficiencies. Offsetting the
cost reduction to the material component of cost of goods sold, direct labor and
manufacturing overhead combined equaled 11.1% of sales for the three months
ended September 30, 1996, increasing from 8.6% of sales for the three months
ended September 30, 1995. This increase was largely due to increased
manufacturing burden related to expanded manufacturing and service capacity that
the Company began adding in the second quarter of 1996.
Selling, General and Administrative ("SG&A") expenses increased to
$2,223,099 for the three months ended September 30, 1996, from $1,105,733 in the
comparable 1995 period. This represents a $1,117,366, or 101.1%, increase in
SG&A expenses for the 1996 period as compared with the 1995 period. Selling
compensation and related payroll expense, including commissions earned on higher
sales, increased by 77.9% for the 1996 period as compared with the 1995 period.
In 1995, the Company began to expand its domestic and international sales
staffs. This has continued into the third quarter of 1996. The Company has also
established a domestic reseller network for its Genisys product, and now has
approximately 40 resellers under contract. Non-selling compensation in SG&A
increased by 78.0% for the three months ended September 30, 1996 compared with
the three months ended September 30, 1995, as the Company added a Chief
Operating Officer, a management information systems (MIS) administrator, and a
new business development group. Travel expenses increased by 25% to $214,075 for
the three months ended September 30, 1996, as compared with $171,243 for the
comparable 1995 period. This increase was due to an expanded sales staff, higher
sales activity, and the Genisys product introduction. Promotional activities and
amortization expenses increased to $134,873 and $212,664, respectively, for the
three months ended September 30, 1996, compared with $31,994 and ($1,423),
respectively, for the three months ended September 30, 1995. Amortization of
capitalized software costs increased to $212,664 in the 1996 period. SG&A
expenses were 50.5% of sales for the three months ended September 30, 1996,
compared with 48.2% for the three months ended September 30, 1995.
Research and Development ("R&D") expenses increased to $771,651 for the
three months ended September 30, 1996, from $405,281 for the three months ended
September 30, 1995, an increase of $366,370, or 90.4%. R&D compensation and
payroll-related expenses increased by 13.1% for the three months ended September
30, 1996 as compared with the comparable 1995 period, while expenses for
contract labor increased by 31.7% in the same period. Travel expenses increased
by 91.4% to $49,449 for the three months ended September 30, 1996 as compared
with $25,830 for the three months ended September 30, 1995. Most of this travel
was required to coordinate the activities of the New York R&D facility with the
Minneapolis facility. Amortization expense decreased to $0 for the three months
ended September 30, 1996, from $48,000 for the comparable 1995 period, while
hardware material usage for new product and continuing engineering increased by
$192,695. As a percentage of sales, R&D expenses amounted to 17.5% and 17.7% of
sales for the three months ended September 30, 1996 and September 30, 1995,
respectively. For the three months ended September 30, 1996, the Company
capitalized $144,527 of software development costs, in accordance with FASB 86,
as compared with $248,419 that was capitalized for the comparable 1995 period.
Total expenditures related to the New York R&D facility amounted to $588,635 for
the three months ended September 30, 1996. Of this, $113,346 was capitalized in
accordance with FASB 86.
The Company's operating loss for the three months ended September 30, 1996
amounted to $89,734 compared with an operating loss of $4,237 for the three
months ended September 30, 1995. Net interest income amounted to $153,581 for
the three months ended September 30, 1996, as compared with net interest income
of $53,235 for the comparable 1995 period.
The Company's net income for the three months ended September 30, 1996,
amounted to $63,847, or 1.5% of sales, compared with net income of $48,998, or
2.1% of sales, for the comparable 1995 period. The earnings per share for the
three months ended September 30, 1996, amounted to $.01 on fully-diluted
weighted average number of common and common equivalent shares outstanding of
6,032,767 as compared with earnings per share of $.01 on weighted average number
of common and common equivalent shares outstanding of 4,793,107 for the 1995
period.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1995
Sales for the nine months ended September 30, 1996 increased to $12,471,780
compared with sales of $6,111,468 for the nine months ended September 30, 1995,
an increase of $6,360,312, or 104.1%. While the FDM 1650 and associated
software, maintenance, and consumable revenue accounted for the majority of this
revenue growth, the Company's reported revenue also benefited from the continued
sales of its Genisys 3D Printer that was introduced in the second quarter of
1996. Revenue from consumable sales has increased significantly in the nine
months ended September 30, 1996, as compared with the nine months ended
September 30, 1995. Gross margins increased to $8,195,656 for the first nine
months of 1996 from $3,876,980 for the comparable 1995 period, an increase of
$4,318,676, or 111.4%. Gross margin as a percentage of sales improved to 65.7%
of sales for the first nine months of 1996 compared with 63.4% of sales for the
first nine months of 1995. The improvement to the Company's gross margin was
largely due to reductions in material costs combined with a higher selling price
for the Company's FDM 1650 product and the increasing revenue from consumable
and maintenance sales that carry correspondingly higher gross margins. The cost
reductions were achieved through both engineering design changes as well as
purchasing efficiencies. Direct labor and manufacturing overhead increased to
9.9% of sales for the first nine months of 1996 compared with 8.6% for the first
nine months of 1995. The Company has been expanding its manufacturing and
service capacity throughout 1996, in anticipation of increased revenues. It is
now poised to be able to produce and service at a much higher revenue level than
attainable earlier in 1996. The Company's combined direct labor and
manufacturing overhead amounted to 8.7% of sales in the second quarter of 1996,
a considerable improvement from the 10.1% recorded in the first quarter of 1996.
SG&A expenses increased to $5,741,090 for the nine months ended September
30, 1996 compared with $2,759,342 for the nine months ended September 30, 1995,
an increase of $2,981,748, or 108.1%. The 108.1% increase in SG&A expenses for
the first nine months of 1996 slightly exceeded the revenue growth experienced
by the Company for the same period. Selling compensation and related payroll
expense, including commissions earned on higher sales, increased by 84.6% for
the nine months ended September 30, 1996 as compared with the comparable 1995
period. Non-selling compensation in SG&A increased by 132.6% for the nine months
ended September 30, 1996 as compared with the nine months ended September 30,
1995, as the Company added a new Chief Operating Officer, business development
group, and MIS support to its existing staff. Due largely to the Company's
expanded sales staff, the establishment of a new reseller network, and higher
sales activity, travel expenses increased by 41.0% to $590,559 for the first
nine months of 1996 from $418,896 for the comparable 1995 period. Commissions
earned by distributors increased to $234,828 for the first nine months of 1996
compared with $38,324 in the comparable 1995 period. Promotional expense,
including the expenses associated with the Genisys product introduction,
increased to $267,329 for the first nine months of 1996 compared with $57,960
incurred by the Company for the comparable 1995 period, and trade show expense
increased by $103,223, or 81.0%, to $230,718 for the first nine months of 1996
compared with $127,495 incurred in the comparable 1995 period. Amortization
expense of the purchase price of the rapid prototyping assets acquired from IBM
and of capitalized software increased to $444,493 for the nine months ended
September 30, 1996 compared with $4,212 for the nine months ended September 30,
1995. SG&A expenses increased to 46.0% of sales for the nine months ended
September 30, 1996 from 45.2% for the nine months ended September 30, 1995.
R&D expenses increased to $2,207,918 for the nine months ended September
30, 1996, from $1,357,048 for the nine months ended September 30, 1995, an
increase of $850,870, or 62.7%. Salaries, wages, and related payroll expense
increased by 22.6% for the first nine months ended September 30, 1996 compared
with the comparable 1995 period. Contract labor increased by 45.3% to $265,488
for the nine months ended September 30, 1996, compared with $182,745 incurred
for the nine months ended September 30, 1995. Travel expenses increased to
$225,982 for the nine months ended September 30, 1996 from $69,450 incurred in
the nine months ended September 30, 1995, an increase of $156,532, or 225.4%.
Most of the 1996 travel was incurred to coordinate the activities of the New
York R&D facility with the Minneapolis facility. R&D hardware material usage
increased to $212,506 for the first nine months of 1996 compared with $38,635 in
the comparable 1995 period. Amortization expense was $0 in the first nine months
of 1996 compared with $139,000 in the first nine months of 1995, as the Company
began charging this to SG&A. Total R&D expenses declined to 17.7% of revenue for
the nine months ended September 30, 1996 from 22.2% of revenue for the nine
months ended September 30, 1995. For the nine months ended September 30, 1996,
the Company capitalized $703,991 of software development costs, in accordance
with FASB 86, as compared with $828,495 that was capitalized for the comparable
1995 period. Total expenditures related to the New York R&D facility amounted to
$2,054,409 for the nine months ended September 30, 1996. Of this, $557,275 was
capitalized in accordance with FASB 86.
The Company's operating income for the nine months ended September 30, 1996
amounted to $246,648, or 2.0% of sales, compared with an operating loss of
$239,410, or 3.9% of sales, for the nine months ended September 30, 1995. Net
interest income totaled $400,273 for the nine months ended September 30, 1996
compared with net interest income of $115,523 for the nine months ended
September 30, 1995.
The Company's net income for the nine months ended September 30, 1996
amounted to $646,921, or 5.2% of sales, compared with a net loss of $123,887, or
2.0% of sales, for the nine months ended September 30, 1995. The earnings per
share for the nine months ended September 30, 1996 was $.11 on fully-diluted
weighted average number of common and common equivalent shares outstanding of
5,837,264 as compared with a loss per share of $.04 on weighted average number
of common shares outstanding of 3,488,980 for the nine months ended September
30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash deficits from its operations for the nine months ended
September 30, 1996 and 1995 were $2,130,403 and $163,351, respectively. A
significant increase in accounts receivable and inventory accounted for
$1,933,043 and $2,369,584, respectively, of the cash deficit for the nine months
ended September 30, 1996, while an increase in the Company's trade payables and
other current liabilities generated $492,529 of cash in the same 1996 period.
Increases in accounts receivable and inventory of $565,481 and $475,979,
respectively, accounted for most of the cash used for the nine months ended
September 30, 1995, while an increase in the Company's trade payables and other
current liabilities generated $586,599 of cash in the same 1995 period. Net cash
used in its investing activities amounted to $1,798,618 in the nine months ended
September 30, 1996, including $246,780 for marketable securities, $789,303 for
the acquisition of machinery and equipment and $751,535 for payments for
intangible assets, $703,991 of which were for the capitalization of software
costs in accordance with FASB 86. Net cash used in the nine months ended
September 30, 1995, for investing activities amounted to $1,475,756, including
$654,881 for the acquisition of machinery and equipment and $847,132 for
payments for intangible assets. Net cash provided by the Company's financing
activities was $5,105,876 for the nine months ended September 30, 1996, as
compared to $4,037,596 for the nine months ended September 30, 1995. In the 1996
period, the Company received net proceeds of $3,274,895 from the exercise of
227,291 options and 253,450 warrants, and received proceeds of $1,946,000 from
notes due on the exercise of 400,000 warrants to purchase common stock, and used
$115,019 for payments under capitalized leases. For the nine months ended
September 30, 1995 the Company received net proceeds from the sale of common
stock of $4,175,529, and used $137,933 for payments under capitalized leases.
Net cash for the nine months ended September 30, 1996, increased by $1,176,855
compared with a net cash increase of $2,398,489 for the nine months ended
September 30, 1995.
At September 30, 1996, the Company's cash and cash equivalents and
marketable securities balances totaled $12,458,739. This cash will be used by
the Company for additional working capital, for expansion of facilities, for new
product development and introduction, for acquisition of production equipment
and computers, and for increased selling and marketing activities. Management
believes that the Company's revenue from operations, its current cash and cash
equivalents balance, and the proceeds from the sale of short term marketable
securities should provide sufficient cash resources to finance its operations
for at least 24 months.
The Company introduced three new products in March 1996- the FDM 1650, the
Genisys 3D Printer, and the Stratasys 8000. The Company began shipments of the
FDM 1650 in March 1996. Unit sales of the Company's FDM product line in the
first nine months of 1996 were more than double comparable 1995 period unit
results. The Company began shipments of the Genisys 3D Printer in June 1996.
Most of these units were discounted demo unit sales to the Company's resellers.
While the Company will continue to sell into the reseller channel in the fourth
quarter of 1996, end user sales of the Genisys machine should also commence in
the fourth quarter, giving the Company better margins on these sales. The
Stratasys 8000 is a system that builds larger prototypes than the Company's
current FDM series of rapid prototyping machines. In early October 1996, the
Company announced that shipments of the Stratasys 8000, originally scheduled for
the fourth quarter of 1996, would be delayed until the second quarter of 1997.
As of September 30, 1996, the Company had net accounts receivable of
$4,702,053 and inventories of $3,126,903. Total current assets were $20,496,561
compared with total current liabilities of $3,061,934. The Company estimates
that it will spend approximately $1,100,000 in 1996 on expansion of its
production capacity and facility, and the acquisition of production equipment
and computers. As of November 4, 1996, material commitments of approximately
$400,000 were signed with several vendors for new product development projects.
These expenditures are expected to be incurred in the next three to six months.
The Company entered into an agreement to lease an additional 59,400 square feet
of combined office/warehouse space for annual base rent of approximately
$252,000. The Company plans to sublease approximately 50% of this space until it
is needed for production capacity expansion. Leasehold improvements of
approximately $180,000 (net) are expected to be incurred in the fourth quarter
of 1996 or first quarter of 1997.
The Company believes that the rapid prototyping industry is growing at
approximately 50% per year. It believes that there is a trend toward lower
priced rapid prototyping systems capable of producing functional prototypes. The
Company also believes that a sizeable marketplace exsists for concept or
visualization 3D printers priced at under $55,000, and that in the longer range
the price of all rapid prototyping systems will decline. This pricing trend
should lead to growth in the more traditional functional protype marketplace as
companies continue to address in-house rapid prototyping needs.
Except for the historical information herein, the matters discussed in this
report are forward-looking statements that involve risks and uncertainities,
including the timely development and acceptance of new products, the impact of
competitive products and pricing, and the other risks detailed from time to time
in the Company's SEC reports, including the report on Form 10-KSB for the year
ended December 31, 1995.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit 27 - Financial Data Schedule
(b) No Reports on Form 8-K.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STRATASYS, INC.
By: /s/ S. Scott Crump
S. Scott Crump
President and Principal
Financial Officer
Dated: November 12, 1996
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