-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tsc2PQaFBEOkR1tWtg1k1Y8bmNBGca3E/LKOZGuXtcr7UXLsKwrfeobuqs7Vd0Rl VVRgxnzPZm/8u80q95OJdw== 0001005477-97-001422.txt : 19970515 0001005477-97-001422.hdr.sgml : 19970515 ACCESSION NUMBER: 0001005477-97-001422 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INRAD INC CENTRAL INDEX KEY: 0000719494 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 222003247 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11668 FILM NUMBER: 97605676 BUSINESS ADDRESS: STREET 1: 181 LEGRAND AVE CITY: NORTHVALE STATE: NJ ZIP: 07647 BUSINESS PHONE: 2017671910 MAIL ADDRESS: STREET 2: 181 LEGRAND AVE CITY: NORTHVALE STATE: NJ ZIP: 07647 FORMER COMPANY: FORMER CONFORMED NAME: INTERACTIVE RADIATION INC DATE OF NAME CHANGE: 19880804 10-Q 1 FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ------------------- 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 0-11668 ---------------------------------------------------------- INRAD, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-2003247 - ------------------------------------------------- ----------------------- (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification Number) INRAD, Inc. 181 Legrand Avenue, Northvale, NJ 07647 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (201) 767-1910 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and formal fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Common shares of stock outstanding as of May 14, 1997: 2,109,271 shares ================================================================================ INRAD, Inc. INDEX
Page Number ----------- Part I. FINANCIAL INFORMATION........................................................................1 Item 1. Financial Statements: Consolidated Balance Sheets as of March 31, 1997 (unaudited) and December 31, 1996..............................................................1 Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and 1996 (unaudited)...................................2 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1996 (unaudited)..........................................3 Notes to Consolidated Financial Statements.........................................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................................................6 Part II. OTHER INFORMATION ..........................................................................9 Item 6. Exhibits and Reports on Form 8-K....................................................9 Signatures .........................................................................................10
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INRAD, Inc. Consolidated Balance Sheets
(unaudited) March 31, December 31, 1997 1996 ------------ ------------- Assets Current assets: Cash and cash equivalents $ 181,425 $ 194,577 Certificate of Deposit 70,000 70,000 Accounts receivable, net 639,418 735,160 Inventories 1,801,245 1,735,144 Unbilled contract costs 68,804 59,350 Other current assets 65,772 60,292 ------------ ------------- Total current assets 2,826,664 2,854,523 Plant and equipment, net 1,336,467 1,431,931 Precious metals 279,248 279,248 Other assets 148,213 149,503 ------------ ------------- Total assets $ 4,590,592 $ 4,715,205 ============ ============= Liabilities and Shareholders' Equity Current liabilities: Note payable - Bank $ 97,500 $ 92,500 Current obligations under capital leases 61,586 73,399 Accounts payable and accrued liabilities 708,587 640,943 Advances from customers 123,023 73,244 Other current liabilities 34,270 48,865 ------------ ------------- Total current liabilities 1,024,966 928,951 Note payable - Bank 197,500 227,500 Obligations under capital leases 14,418 4,751 Secured Promissory Notes 250,000 250,000 Subordinated Convertible Notes 1,203,261 1,203,261 Unsecured Demand Convertible Note 100,000 100,000 Note payable - Shareowner 566,049 566,049 ------------ ------------- Total liabilities 3,356,194 3,280,512 ------------ ------------- Commitments (Note 10) Shareholders' equity: Common stock: $.01 par value; 2,121,571 shares issued 21,216 21,216 Capital in excess of par value 6,051,791 6,051,791 Accumulated deficit (4,786,809) (4,586,514) ------------ ------------- 1,286,198 1,486,493 Less - Common stock in treasury, at cost (12,300 shares at March 31, 1997; and at December 31, 1996) (51,800) (51,800) ------------ ------------- Total shareholders' equity 1,234,398 1,434,493 ------------ ------------- Total liabilities and shareholders' equity $ 4,590,592 $ 4,715,205 ============ =============
See Notes to Consolidated Financial Statements. 1 INRAD, Inc. Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1997 1996 -------------- -------------- Revenues: Net product sales $ 1,048,172 $ 1,149,229 Contract research and development 105,126 130,808 -------------- -------------- 1,153,298 1,280,037 -------------- -------------- Costs and expenses: Cost of goods sold 796,611 961,905 Contract research and development expenses 106,467 132,670 Selling, general and administrative expenses 359,588 295,682 Internal research and development expenses 27,874 25,693 -------------- -------------- 1,290,540 1,415,950 -------------- -------------- Operating (loss) (137,242) (135,913) Other income (expense): Interest expense (65,204) (74,801) Interest and other income, net 2,151 10,824 -------------- -------------- Net (loss) (200,295) (199,890) Accumulated deficit, beginning of period (4,586,514) (4,212,740) -------------- -------------- Accumulated deficit, end of period $ (4,786,809) $ (4,412,630) ============== ============== Net (loss) per share $(0.09) $(0.09) ============== ============== Weighted average shares outstanding 2,109,271 2,108,737 ============== ==============
See Notes to Consolidated Financial Statements. 2 INRAD, Inc. Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1997 1996 -------------- -------------- Cash flows from operating activities: Net income (loss) $ (200,295) $ (199,890) -------------- -------------- Adjustments to reconcile net (loss) to cash provided by (used in) operating activities: Depreciation and amortization 131,076 139,531 Noncash interest - 40,692 Gain on sale of equipment - (8,621) Changes in assets and liabilities: Accounts receivable 95,742 95,508 Inventories (66,101) (3,810) Unbilled contract costs (9,454) 14,029 Other current assets (5,480) (22,120) Precious metals - - Other assets (782) (14,346) Accounts payable and accrued liabilities 90,334 31,829 Advances from customers 49,779 50,953 Other current liabilities (14,595) (14,784) -------------- -------------- Total adjustments 270,519 308,861 -------------- -------------- Net cash provided by operating activities 70,224 108,971 -------------- -------------- Cash flows from investing activities: Capital expenditures (33,540) (65,084) Proceeds from sale of equipment - 299,180 -------------- -------------- Net cash provided by (used in) investing activities (33,540) 234,096 -------------- -------------- Cash flows from financing activities: Principal payments of note payable - Bank (25,000) (15,000) Principal payments of capital lease obligations (24,836) (103,247) -------------- -------------- Net cash (used in) financing activities (49,836) (118,247) -------------- -------------- Net increase (decrease) in cash and cash equivalents (13,152) 224,820 Cash and cash equivalents at beginning of period 194,577 37,981 -------------- -------------- Cash and cash equivalents at end of period $ 181,425 $ 262,801 ============== ==============
See Notes to Consolidated Financial Statements. 3 INRAD, Inc. Notes to Consolidated Financial Statements (Unaudited) NOTE 1 - SUMMARY OF ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited interim consolidated financial statements of INRAD, Inc. (the "Company") reflect all adjustments, which are of a normal recurring nature, and disclosures which, in the opinion of management, are necessary for a fair statement of results for the interim periods. It is suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements as of December 31, 1996 and 1995 and for the years then ended and notes thereto included in the Registrant's Annual Report on Form 10-K, filed with the Securities and Exchange Commission. Inventory Valuation Interim inventories as well as cost of goods sold are computed by using the gross profit method of interim inventory valuation and applying an estimated gross profit percentage based on the actual values for the preceding fiscal year, unless the company believes that a different gross profit percentage may more accurately reflect its current year's cost of goods sold and gross profit. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Net Loss Per Share Net loss per share is computed using the weighted average number of common shares outstanding. The effect of common stock equivalents has been excluded from the computation because their effect is antidilutive. In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.128, "Earnings per Share". This Statement establishes standards for computing and presenting earnings per share ("EPS") and applies to all entities with publicly held common stock or potential common stock. This Statement replaces the presentation of primary EPS and fully diluted EPS with a presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects the potential dilution of securities that could share in the earnings. This Statement is not expected to have a material effect on INRAD's reported EPS amounts. This Statement is effective for INRAD's financial statements for the year ended December 31, 1997 4 NOTE 2 - INVENTORIES AND COST OF GOODS SOLD For the three months period ended March 31, 1997, the Company used 76% as its estimate cost of goods sold percentage. For the previous year, 1996, the actual cost of goods sold percentage was 74.8%. The Company believes 76% better approximates the expected 1997 annual cost of goods sold percentage based on estimated profitability of actual sales through March 31, 1997 and the anticipated annual level of product shipments and related costs. For the three months period ended March 31, 1996, the Company used 83.7% as its estimate cost of goods sold percentage. NOTE 3 - DEBT Note Payable - Shareowner By mutual informal agreement, the Company has deferred certain interest payments to its principal shareowner. During the quarter ended March 31, 1997, the Company did not make any interest payments. The Company expects to make the required quarterly interest payments in 1997 and, subject to adequate cash flow, any deferred payments. Although by its terms the indebtedness to the shareowner is due on December 31, 1996, it cannot be repaid until the Chase Manhattan Bank debt has been repaid in full. The shareowner loan has been classified as noncurrent in the accompanying balance sheet because the shareowner has agreed not to demand payment prior to April 1, 1998. Unsecured Demand Convertible Note Although by its terms the Note is due on demand, it cannot be repaid until the Chase Manhattan Bank debt has been repaid in full. The Demand Note has been classified as noncurrent in the accompanying balance sheet because the Note holder has agreed not to demand payment prior to April 1, 1998. Secured Promissory Note Although by its terms the Note is due on July 8, 1997, it cannot be repaid until the Chase Manhattan Bank debt has been repaid in full. The Promissory note has been classified as noncurrent in the accompanying balance sheet because the Note holder has agreed not to demand payment prior to April 1, 1998. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Company's unaudited consolidated financial statements presented elsewhere herein. The discussion of results should not be construed to imply any conclusion that such results will necessarily continue in the future. Net Product Sales Net sales for the first quarter of 1997 decreased $101,000, or 9% from the comparable quarter in 1996. International shipments in the first three months of 1997 were $245,000 (23% of total shipments) compared to $162,000 (14%) for the first three months of 1996. International sales increased over the prior year due to an increase in bookings of new overseas orders. Product sales during the first quarter of 1997 were less than the prior year because bookings were down in the first quarter of 1997 as compared with the first quarter of 1996, particularly orders shipable on a short term basis. The backlog of unfilled product orders was $1,943,000 at March 31, 1997, compared with $1,672,000 at December 31, 1996 and $2,367,000 at March 31, 1996. Cost of Goods Sold For the three months ended March 31, 1997, the Company used 76% as its estimated cost of goods sold percentage. For the previous year, 1996, the actual cost of goods sold percentage was 74.8%. The Company believes 76% better approximates the expected 1997 annual cost of cost of goods sold percentage based on estimated profitability of actual sales through March 31, 1997 and the anticipated annual level of product shipments and related costs. For the three month period ended March 31, 1996, the Company used 83.7% as its estimated cost of goods sold percentage. Contract Research and Development Contract research and development revenues were $105,000 for the three months ended March 31, 1997, compared to $131,000 for the three months ended March 31, 1996. Related contract research and development expenditures, including allocated indirect costs, for the quarter ended March 31, 1997 were $106,000 compared to $133,000 for the comparable 1996 quarter. Revenues decreased from 1996 to 1997 due to a lower backlog of contracts. The Company intends to focus its future funded efforts on programs closely aligned with its core business. The Company's backlog of contract R&D was $331,000 at March 31, 1997, compared with $75,000 at December 31, 1996 and $357,000 at March 31, 1996. 6 Selling, General and Administrative Expenses Selling, general and administrative expenses increased $64,000, or 22%, in the first quarter of 1997. The increase is due primarily to higher selling expenses, including sales salaries, due to the addition of a sales person, and a lower allocation of general and administrative expenses to contract research and development. Subject to availability of resources, the Company expects to increase certain selling costs in 1997. Internal Research and Development Expenses Research and development expenses for the quarter ended March 31, 1997 were $28,000 compared to $26,000 for the quarter ended March 31, 1996. The Company is focusing its internal Research and Development efforts in 1997 on a few new products with short development cycles. Interest Expense Interest expense was $65,000 and $75,000 for the quarters ended March 31, 1997 and 1996, respectively. 7 LIQUIDITY AND CAPITAL RESOURCES During the quarter ended March 31, 1997, the Company signed an agreement with Chase Manhattan Bank (successor to Chemical Bank) amending the terms of its credit facility. The new agreement requires monthly principal payments of $10,000 for January, 1997, and 7,500 from February 1997 until December 1997, monthly principal payments of $10,000 from January 1998 until December 1998, and monthly principal payments $12,500 from January 1999 until August 1999. A final payment of $7,500 is due on September 1, 1999. The Company's cash flow requirements will increase in 1997 because the Company must begin making cash interest payments ($110,000 annually) on its Subordinated Convertible Notes issued in 1993. Subject to adequate cash flow, the Company may be able to resume interest payments to its principal shareowner. During the quarter ended March 31, 1997, the Company did not make any quarterly interest payments to the shareowner. Capital expenditures, including internal labor and overhead charges, for the three months ended March 31, 1997 and 1996 were $34,000 and $65,000, respectively. Until the Company is generating satisfactory amounts of cash flow from its operations, it is expected that future capital expenditures will be kept to a minimum. Management believes that in the short term, this limitation will not have a material effect on operations. During the first quarter ended March 31, 1997 and for each of the three years in the period ended December 31, 1996, the Company has suffered recurring losses from operations. Cash outflows during these periods have been funded on the basis of borrowings from, and issuance of common stock and warrants to, shareowners including the principal shareowner, as further described in the Company's Annual Report on Form 10-K. Management expects that cash flow from operations will provide adequate liquidity for the Company's operations in 1997. This will substantially depend, however, on the Company's ability to improve operating results and thereby generate adequate cash flow from operations. Because of the uncertainty relating to the Company's ability to improve operating results and cash flows, there is substantial doubt about the Company's ability to continue as a going concern. 8 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits: 11. An exhibit showing the computation of per-share earnings is omitted because the computation can be clearly determined from the material contained in this Quarterly Report on Form 10-Q. 27. Financial Data Schedule. (B) Reports on Form 8-K: None. 9 SIGNATURES Pursuant to 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. INRAD, Inc. By: /s/ Warren Ruderman ------------------------------------- Warren Ruderman President and Chief Executive Officer By: /s/ James L. Greco ------------------------------------- James L. Greco Controller (Chief Accounting Officer) Date: May 14, 1997 10 SIGNATURES Pursuant to 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. INRAD, Inc. By: ------------------------------------- Warren Ruderman President and Chief Executive Officer By: ------------------------------------- James L. Greco Controller (Chief Accounting Officer) Date: May 14, 1997 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from The Consolidated Balance Sheet and Consolidated Statement of Operations found on pages two and three on the Company's 10-Q for the year to date and is qualified in its' entirety by reference to such financial statements. 3-MOS DEC-31-1997 MAR-31-1997 181,425 0 644,418 5,000 1,801,245 2,826,664 8,118,740 6,782,273 4,590,592 1,024,966 2,331,228 0 0 21,216 1,213,182 4,590,592 1,153,298 1,153,298 903,078 903,078 27,874 0 65,204 (200,295) 0 (200,295) 0 0 0 (200,295) (0.09) 0
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