================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 000-28520
- --------------------------------------------------------------------------------
n-Vision, Inc.
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Delaware 54-1741313
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>
7680 Old Springhouse Road
Madison Building, First Floor
McLean, Virginia 22102
(Address of principal executive offices)
Registrant's telephone number, including area code: (703) 506-8808
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or Section 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 ( )
The number of outstanding shares of the registrant's Common Stock, par
value $.01 per share, was 2,651,523 on November 4, 1999.
================================================================================
<PAGE>
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 1999 and
December 31, 1998............................................................... 3
Statements of Operations for the three months and nine months
ended September 30, 1999 and September 30, 1998................................. 4
Statements of Cash Flows for the nine months ended
September 30, 1999 and September 30, 1998....................................... 5
Notes to Financial Statements .................................................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation....................... 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings............................................................... 12
Item 2 Changes in Securities........................................................... 12
Item 3 Defaults Upon Senior Securities................................................. 12
Item 4 Submission of Matters to a Vote of Security Holders............................. 12
Item 5 Other Information............................................................... 12
Item 6 Exhibits and Reports on Form 8-K................................................ 12
SIGNATURES...................................................................... 14
Exhibit 27 Financial Data Schedule
</TABLE>
2
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
n-VISION, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 787,780 $ 1,669,302
Accounts Receivable 148,395 236,454
Inventories 571,046 974,099
Prepaid Expenses 82,732 53,580
---------- -----------
Total Current Assets 1,589,953 2,933,435
Property and Equipment 248,739 420,049
(Net of Accumulated Depreciation)
Other Assets 3,757 13,801
---------- -----------
$1,842,449 $ 3,367,285
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities-Long Term Note Due ATS $ 126,000 $ 120,000
Current Portion of Capital Lease Obligation - 2,225
Accounts Payable 57,072 359,561
Accrued Salaries and Benefits 60,277 64,280
Deferred Revenue and Accrued Warranty Costs 28,917 102,432
----------- -----------
Total Current Liabilities 272,266 648,498
Long Term Liabilities
Note Payable-ATS 180,000 240,000
Stockholders' Equity
Common Stock, $.01 par value, 2,651,523 shares issued
and outstanding 26,515 26,515
Paid in Capital 10,473,679 10,473,679
Accumulated Deficit (9,110,011) (8,021,407)
----------- -----------
Total Stockholders' Equity 1,390,183 2,478,787
----------- ------------
$ 1,842,449 $ 3,367,285
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
n-VISION, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------ -----------------------------
1999 1998 1999 1998
------------- ------------ ------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $ 252,638 $ 437,820 $ 900,107 $2,407,719
Cost of Sales 164,395 210,642 474,677 1,208,151
Inventory Write-down 234,509 - 234,509 -
---------- ---------- ----------- ----------
Gross Margin (146,266) 227,178 190,921 1,199,568
Operating Expenses
General and Administrative 249,988 168,985 703,856 687,978
Product Development 118,902 169,954 259,556 351,594
Marketing and Sales 129,716 154,718 330,705 417,943
---------- ---------- ----------- ----------
Loss from operations (644,872) (266,479) (1,103,196) (257,947)
Non-Operating Income
Interest Income 10,139 22,119 35,016 67,405
Interest Expense (6,000) (8,831) (20,425) (29,503)
---------- ---------- ----------- ----------
Loss before income taxes (640,733) (253,191) (1,088,605) (220,045)
Income Tax expense - - - -
---------- ---------- ----------- ----------
Net Loss $ (640,733) $ (253,191) $(1,088,605) $ (220,045)
========== ========== =========== ==========
Weighted average shares outstanding 2,651,523 2,646,836 2,651,523 2,646,836
========== ========== =========== ==========
Loss per Share $ (0.24) $ (0.10) $ (0.41) $ (0.08)
========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
n-VISION, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------------------------
1999 1998
--------------- -----------------
(Unaudited) (Unaudited)
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash Flows from Operating Activities
Net Loss $(1,088,605) $(220,045)
----------- ---------
Adjustments to reconcile Net (Loss) to net cash used
in operating activities
Depreciation and amortization 186,541 202,491
Inventory Write-Down 234,509 -
Loss on Disposal of Fixed Assets 69,056 12,650
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 87,659 (254,485)
(Increase) Decrease in Inventories 168,544 84,204
(Increase) Decrease in Prepaid Expenses (29,152) 18,691
(Increase) Decrease in Other Receivable 400 (54,781)
(Decrease) Increase in Accounts Payable (302,489) (69,387)
(Decrease) Increase in Accrued Salaries and Benefits (4,003) (51,568)
(Decrease) Increase in Accrued Interest 6,000 8,400
(Decrease) Increase in Deferred Revenue and Warranty Reserve (73,515) 13,248
----------- ---------
Total Adjustments 343,550 (90,537)
----------- ---------
Net Cash Used in Operating Activities (745,055) (310,582)
----------- ---------
Cash Flows from Investing Activities
Purchase of property and equipment (74,984) (44,578)
Proceeds from sale of fixed assets 741 -
----------- ---------
Net Cash Used in Investing Activities (74,243) (44,578)
----------- ---------
Cash Flows from Financing Activities
Payments of Long Term Note - ATS (60,000) (60,000)
Payments of Capital Lease Obligations (2,225) (18,342)
----------- ---------
Net Cash Used in Financing Activities (62,225) (78,342)
----------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (881,523) (433,502)
Cash and Cash Equivalents at January 1 1,669,302 876,805
----------- ---------
Cash and Cash Equivalents at September 30 $ 787,780 $ 443,303
=========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
n-VISION, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A Interim Financial Statements
The condensed financial statements for the three month and nine month
periods ended September 30, 1999 and September 30, 1998 are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim period. The condensed
financial statements should be read in conjunction with the audited financial
statements and notes thereto, together with management's discussion and analysis
of financial condition and results of operations, contained in the Company's
Annual Report to Shareholders for the year ended December 31, 1998. The results
of operations for the three months and nine months ended September 30, 1999 are
not necessarily indicative of the results for the entire fiscal year ending
December 31, 1999.
In preparing financial statements in conformity with generally accepted
accounting principles management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Note B Earnings per share
In 1997, the Financial Accounting Standards Board issued Financial
Accounting Standards No. 128 - "Earnings per Share." Statement 128 replaces the
presentation of primary and fully diluted earnings per share ("EPS") pursuant to
Accounting Principles Board Opinion No. 15 with the presentation of basic and
diluted EPS. Basic EPS excludes dilution and is computed by dividing net income
available to common shareholders by the weighted number of shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common shares were exercised or converted
into common shares and then shared in the earnings of the Company. Options
granted to employees are accounted for in accordance with APB 25, whereby if
options are priced at fair market value or above at the date of the grant, no
compensation expense is recognized.
The following table sets forth the reconciliation between basic and
diluted EPS.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999 1998
- --------------------------------------------------------------------------------------------------------
Numerator
<S> <C> <C>
Net Income (Loss) available for common shareholders - Basic (1,088,605) (220,045)
Income Adjustments - -
---------- ---------
Net Income (Loss) available for common shareholders - Diluted (1,088,605) (220,045)
Denominator
Denominator for Basic EPS-weighted average shares 2,651,523 2,646,836
Effect for Dilutive Securities
Employee Stock Options - -
---------- ---------
Denominator for diluted EPS 2,651,523 2,646,836
- --------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
Note C Merger Agreement
On October 15, 1999, the Company signed a definitive agreement to merge
with a subsidiary of Advanced Technology Systems, Inc. ("ATS"). ATS, which is
headquartered in McLean, Virginia, provides systems engineering and software
development solutions to government and commercial clients worldwide.
The transaction is structured as a merger in which a newly-formed
subsidiary of ATS will merge with and into the Company, with the Company
surviving as a wholly-owned subsidiary of ATS. If the merger is approved by the
Company's stockholders and consummated, each stockholder of the Company will
receive $0.50 in cash per share of the Company's common stock. The transaction
is subject to customary conditions including approval by the Company's
stockholders. The Company anticipates holding a special meeting of stockholders
during the fourth quarter of 1999 or first quarter of 2000 to seek stockholder
approval of this transaction.
7
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Some statements in this Management's Discussion and Analysis contain
forward-looking information that involve a number of risks and uncertainties,
the possible realization of which could have material adverse effects on the
Company's operating results. Factors that may cause actual results to differ
materially include: development of new products, and rapid change in technology
that may displace products sold by the Company; the highly competitive market in
which the Company operates; dependence upon a limited number of suppliers for
product components, fluctuation in the Company's quarterly results of operations
due to the timing of orders from customers; and other risk factors listed in the
Company's SEC filings including but not limited to Form SB-2 Registration
Statement dated April 2, 1996 and any amendments thereto, as well as the Annual
Report to Shareholders for the year ended December 31, 1998.
General
n-Vision, Inc. ("Company"), a Delaware corporation, designs, develops,
manufactures, and markets state-of-the-art 3D immersive displays for use in
advanced visualization applications, products, and systems for a variety of
commercial, industrial, and military applications. The Company's products and
systems are marketed worldwide, but principally to customers in North America,
Europe, and the Pacific Rim.
On October 15, 1999, the Company signed a definitive agreement to merge with a
subsidiary of Advanced Technology Systems, Inc. ("ATS"). ATS, which is
headquartered in McLean, Virginia, provides systems engineering and software
development solutions to government and commercial clients worldwide. The
transaction is structured as a merger in which a newly-formed subsidiary of ATS
will merge with and into the Company, with the Company surviving as a wholly
owned subsidiary of ATS. If the merger is approved by the stockholders and
consummated, each stockholder of the Company will receive $0.50 in cash per
share of the Company's common stock. As a result of the merger, the entire
equity interest in the Company will be beneficially owned by ATS and the
Company's stockholders will no longer have an equity interest in the Company.
The transaction is subject to customary conditions including approval by the
Company's stockholders. The Company anticipates holding a special meeting of
stockholders during the fourth quarter of 1999 or first quarter of 2000 to seek
stockholder approval of this transaction.
Financial Condition
Nine Months Period Ended September 30, 1999
For the nine months ended September 30, 1999, the Company reported cash and cash
equivalents of $787,780, a 53% decrease from December 31, 1998 when the Company
reported cash and cash equivalents of $1,669,302. This decrease is due to the
lower level of revenue and continued losses in the first nine months of the
year. Accounts receivable at September 30, 1999 was $148,395, a decrease of 37%
from the December 31, 1998 balance of $236,454, due to the decreased sales.
Inventories decreased by 41% to $571,046 from $974,099 at December 31, 1998.
This decrease is due to a one-time write off of obsolete inventory of $234,509
during the third quarter. This write off was based on the decision to
discontinue the marketing and production of the Datavisor LCD due to the
continuing unsuccessful attempts to manufacture the product cost-effectively to
compete with lower-priced competing products. The result was a lack of customer
interest in the Datavisor LCD. Net Property and Equipment decreased by 41% from
$420,049 at December 31, 1998 to $248,739 at September 30, 1999. This decrease
is the result of current year depreciation rates and also the associated write
off all Datavisor LCD demonstration units with a net value of $64,159. Current
liabilities decreased by 58% to $272,266 on September 30, 1999 from $648,948 on
December 31, 1998. This decrease is attributable to the decrease in accounts
payables and deferred revenues and accrued warranty costs. Accounts payable
decreased by 84% to $57,072 on September 30, 1999 from $359,561 on December 31,
1998. The higher accounts payables at December 31, 1998 was a
8
<PAGE>
result of inventory purchases made at the end of 1998 that were paid in the
first quarter of 1999. Deferred revenue and accrued warranty costs decreased by
72% to $28,917 from $102,432 at December 31, 1998. This decrease is attributable
to the decrease in sales during 1999 and the expiration of extended warranties.
The long-term portion of the unsecured note payable to ATS decreased by 25%
during the past nine months to $180,000. The outstanding balance of this loan as
of September 30, 1999 was $300,000 with interest due on principal outstanding of
8% per annum. Principal payments of $60,000 are payable twice each year in June
and December. Annual maturities of this note are $120,000, with the final
payment to be made in December 2001.
Results of Operations
Quarter Ended September 30, 1999 Compared to Quarter Ended September 30, 1998
For the three months ended September 30, 1999, the Company reported revenue of
$252,638, a 42% decrease compared to the same period ended September 30, 1998
when the Company reported revenue of $437,820. The Company's 1998 level of
revenue was primarily attributable to the delivery of display systems to a
subsidiary of The Walt Disney Company, which was completed in 1998. The
Company's gross margin on sales was (58)% in the third quarter of 1999 compared
to 51% in the third quarter of 1998. This decrease in gross margin is due to a
one-time charge off of obsolete inventory of $234,509 during the third quarter
of 1999. This write-off was based on the decision to discontinue the marketing
and production of the Datavisor LCD due to continued unsuccessful attempts to
manufacture the product cost-effectively to compete with lower-priced competing
products. As of September 30, 1999 the Company had a backlog of undelivered
products and services of approximately $156,753.
Operating expenses for the three months ended September 30, 1999 increased to
$498,606 when compared to the same three-month period in 1998 where operating
expenses were $493,657. The increase in operating expenses was primarily the
result of the one time write-off of all Datavisor LCD demonstration units with a
net value of $64,159. Management is continuing to evaluate the cost structure of
the Company so as to determine if additional savings can be made. No assurances
can be made that the Company's operating costs can be decreased in the future or
sustained at their current levels.
For the three months ended September 30, 1999, the Company reported a loss from
operations of $644,872 compared to a loss from operations of $266,479 for the
same period in 1998. The increased loss is primarily attributable to decreased
overall revenues and the write-off associated with the Datavisor LCD.
Non-operating income for the three months ended September 30, 1999 was $10,139
compared to $22,119 for the same three month period in 1998. Non-operating
expenses were $6,000 for the third quarter in 1999 compared to $8,831 in the
third quarter in 1998, resulting in a positive net interest margin of $4,139 for
the third quarter in 1999 compared to a positive net interest margin of $13,288
for the third quarter in 1998. The decrease in interest margin was primarily
attributable to lower cash on hand.
For the three months ended September 30, 1999, the Company reported a net loss
of $640,733 and loss per share of $0.24 compared to a net loss of $253,191 and
loss per share of $0.10 for the same three month period in 1998. This decrease
is primarily attributable to a decrease in overall revenues and the write-off
associated with the Datavisor LCD.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998
For the nine months ended September 30, 1999, the Company reported revenue of
$900,107, a 63% decrease compared to the same period ended September 30, 1998
when the Company reported revenue of $2,407,719. The Company's 1998 level of
revenue was primarily attributable to the delivery of display systems to a
subsidiary of The Walt Disney Company, which was completed in 1998. The
Company's gross margin on sales was 21% in the first nine months
9
<PAGE>
of 1999 compared to 49% in the first nine months of 1998. Excluding the one time
write-off of the Datavisor LCD inventory, the gross margin for the nine-month
period ending September 30, 1999 would have been 47%.
Operating expenses for the nine months ended September 30, 1999 decreased to
$1,294,117 when compared to the same nine-month period in 1998 where operating
expenses were $1,457,515. The decrease in operating expenses was the combined
result of lower product development costs and marketing and sales costs. General
& Administrative costs were higher due primarily to the one time write-off of
all Datavisor LCD demonstration units with a net value of $64,159.
For the nine months ended September 30, 1999, the Company reported a loss from
operations of $1,103,196 compared to a loss from operations of $257,947 for the
same period in 1998. The decrease is primarily attributable to decreased
revenues during 1999 when compared to the same period in 1998, as well as the
write-off associated with the Datavisor LCD.
Non-operating income for the nine months ended September 30, 1999 was $35,016
compared to $67,405 for the same nine month period in 1998. Non-operating
expenses were $20,425 for the first nine months of 1999 compared to $29,503
during the same period in 1998, resulting in a positive net interest margin of
$14,591 for the first nine months of 1999 compared to a positive net interest
margin of $37,902 for the same period in 1998. The decrease in interest margin
was primarily attributable to lower cash on hand.
For the nine months ended September 30, 1999, the Company reported a net loss of
$1,088,605 and loss per share of $0.41 compared to a net loss of $220,045 and
loss per share of $0.08 for the same nine month period in 1998. The primary
cause is a decrease in overall revenues and the write-off associated with the
Datavisor LCD during 1999.
Liquidity and Capital Resources
Working capital totaled $1,317,687 as of September 30, 1999 compared to a
working capital balance of $2,574,579 as of September 30, 1998. The decrease is
primarily attributable to operating losses sustained during the past twelve
months, including the write-off associated with the Datavisor LCD in 1999. The
Company recently signed a definitive agreement to merge with a wholly-owned
subsidiary of ATS, as described above. If the merger is not approved by the
stockholders and consummated, the Company believes that the current level of
working capital is sufficient to meet its needs through the Spring 2000.
Thereafter, the Company may have no choice but to liquidate the Company if it
cannot find alternative sources of capital.
The Company has 1,380,000 Class A warrants outstanding which expire May 29,
2001. Two warrants may be exercised and exchanged for one share of common stock
at an exercise price of $11.00 per share. The warrants are also subject to
redemption at the Company's election if the Company's common stock price equals
or exceeds $18.00 per share for 20 consecutive trading days within a period of
30 days. The Company can make no assurances that investors will elect to
exercise the warrants or that the required exercise price or redemption price
can be reached since the current trading price has been approximately $0.30 to
$0.50 since the announcement of the merger and was in the $0.15 to $0.30 range
prior thereto.
Income Taxes
The Company is organized as a C Corporation and pays income taxes based upon
accrual based taxable income adjusted for differences in the timing of reporting
certain expenses for tax and financial statement purposes. The Company's income
taxes payable, if any, that may arise in the future may be offset by credits
available for certain research and development expenditures incurred.
10
<PAGE>
As of December 31, 1998, the Company had a net operating loss carryforward
available to offset future taxable income generated through 2018 of
approximately $3,800,000. The deferred tax asset associated with these benefits
has been fully reserved in the Company's financial statements because of the
uncertainty surrounding future profitability. In the event of a change in
control of the Company, use of such a carryforward could be reduced.
Year 2000 Issues
The Company is aware of the issues associated with the programming code in
existing computer systems as the Year 2000 approaches. The "Year 2000 Problem"
is pervasive and complex as virtually every computer operation will be affected
in some way by the rollover of the two-digit year value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the year changes to 2000. The potential exists for computer system failures or
miscalculations by computer programs, which could disrupt operations.
The Company has conducted a review of its internal computer and other systems
deemed to be date sensitive to assess its exposure to the Year 2000 problem. The
Company has already modified or replaced internal systems that are not Year 2000
compliant. Based upon the review, management believes that the Year 2000 problem
will not have a material adverse effect on the internal operations of the
Company.
Additionally, the Company has communicated with its major vendors and suppliers
to determine their state of readiness relative to the Year 2000 problem and the
Company's exposure to third party Year 2000 issues. To date, the Company has
received responses from its major vendors and suppliers indicating that they
will be Year 2000 ready. However, there can be no guarantee that the systems of
other companies on which the Company's business relies will be converted in a
timely manner, or that representations made to the Company by third parties will
be accurate. As a result, the failure of a major vendor or supplier to
adequately address their Year 2000 problem could have a material adverse effect
on the operations of the Company.
The Company's Year 2000 conversion efforts have not been budgeted or tracked as
separate projects, but have been occurring in conjunction with normal sustaining
activities. All costs related to the Company's Year 2000 problem are being
expensed as incurred, while the cost of new hardware or software is being
capitalized or amortized over its expected useful life. The costs associated
with Year 2000 compliance have not been and are not anticipated to be material
to the Company's financial condition or results of operations. Specifically, as
of September 30, 1999, the Company has spent approximately $60,000 and does not
expect to incur any additional material costs. These costs are based upon
management's best estimates. However, there can be no guarantee that these
estimates will be achieved and actual results could differ from these plans. The
Company's contingency plan relative to the Year 2000 problem consists of
readiness to switch to Year 2000 compliant vendors if the Company discovers that
any of its current vendors are not Year 2000 ready.
The Company's products make no internal calculations regarding dates. Therefore,
the Company's products do not pose a Year 2000 compliance issue. Although the
Company has no reason to conclude that any specific supplier represents a
material risk, the most likely risk would entail production disruption due to
inability of suppliers, some of whom represent the sole source of component
parts for certain items, to deliver such critical parts. The Company is unable
to quantify such a scenario, but it could potentially result in a material
adverse effect on results of operations, liquidity or financial condition of the
Company.
The preceding Year 2000 issue discussion contains various forward-looking
statements, which represent the Company's belief or expectations regarding
future events. When used in the Year 2000 discussion, the words "believes,"
"expects," "estimates" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements include, without
limitation, the Company's expectations as to when it will complete the
renovation and testing phases of its Year 2000 program as well as its Year 2000
11
<PAGE>
contingency plans; its estimated cost of achieving Year 2000 readiness; and the
Company's belief that its internal systems will be Year 2000 compliant in a
timely manner. All forward-looking statements involve a number of risks and
uncertainties that could cause the actual results to differ materially from the
projected results. Factors that may cause these differences include, but are not
limited to, the availability of qualified personnel and other information
technology resources; the ability to identify and renovate all date sensitive
lines of computer code or to replace embedded computer chips in affected systems
and equipment; and the actions of government agencies or other third parties
with respect to Year 2000 problems.
Seasonality
Based on its limited experience to date, the Company believes that its future
operating results will not be subject to seasonal changes. Such effects, should
they occur, might become apparent in the Company's operating results during a
period of expansion. However, the Company can make no assurances that its
business can be significantly expanded.
PART II OTHER INFORMATION
Item 1. - Legal Proceedings
The Company is not involved in any pending legal proceedings other than
legal proceedings occurring in the ordinary course of business. Management
believes that none of these legal proceedings, individually or in the aggregate,
will have a material adverse impact on the results of operations or financial
condition of the Company.
Item 2. - Changes in Securities
None.
Item 3. - Defaults Upon Senior Securities
None.
Item 4. - Submission of Matters to a Vote of Security Holders
None.
Item 5. - Other Information
On July 1, 1999, Christopher J. Lewis resigned as a Director of
n-Vision.
On September 7, 1999, Dr. Nelson A. Merritt was unanimously elected as
Director by the remaining directors to fill a vacant seat on the Board. His term
will expire in 2000.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits
List of Exhibits.
3.1** Amended and Restated Certificate of Incorporation of the
Company.
3.2* Amended and Restated Bylaws of the Company.
4.1* Specimen Copy of Common Stock Certificate.
12
<PAGE>
4.2* Specimen Copy of Class A Warrant.
4.3* Form of Warrant Agreement.
10.1* Employment Agreement with Delmar J. Lewis, as amended.
10.2*** Consulting Agreement with Christopher J. Lewis.
10.3* Asset Purchase Agreement dated November 1, 1994.
11.0 Computation of Per Share Earnings (Incorporated by reference
to Notes to Financial Statements included herein).
27.0 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ending September 30, 1999.
- -----------------
* Incorporated herein by reference into this document from the Exhibits
to Form SB-2 Registration Statement, filed on April 19, 1996, and any
amendments thereto (Registration No. 333-3098).
** Incorporated herein by reference into this document from the Proxy
Statement for the Special Meeting of Stockholders of the Company dated
October 19, 1998.
*** Incorporated herein by reference to the quarterly report on Form 10QSB
filed with the Securities and Exchange Commission on August 16, 1999.
13
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
Dated: November 8, 1999
n-VISION, INC.
(Registrant)
/s/ Eric A. Hall
---------------------------------------------
Eric A. Hall
Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the form 10-QSB for the period ended September 30, 1999 and
is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 787,780
<SECURITIES> 0
<RECEIVABLES> 173,395
<ALLOWANCES> 25,000
<INVENTORY> 571,046
<CURRENT-ASSETS> 1,589,953
<PP&E> 925,056
<DEPRECIATION> 676,317
<TOTAL-ASSETS> 1,842,449
<CURRENT-LIABILITIES> 272,266
<BONDS> 180,000
0
0
<COMMON> 26,515
<OTHER-SE> 1,363,668
<TOTAL-LIABILITY-AND-EQUITY> 1,842,449
<SALES> 900,107
<TOTAL-REVENUES> 935,123
<CGS> 709,186
<TOTAL-COSTS> 1,294,117
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,425
<INCOME-PRETAX> (1,103,196)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,088,605)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,088,605)
<EPS-BASIC> (.41)
<EPS-DILUTED> (.41)
</TABLE>
