-----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, O0FDdERAJMhzV4DHE/5XxOpAXM0tUTMoPOuhAhY0k+ad4OXy/i61BtjDW01rK7mR wTJ/IQkaL+HVkq0F4EBQCw== 0000896415-96-000124.txt : 19961106 0000896415-96-000124.hdr.sgml : 19961106 ACCESSION NUMBER: 0000896415-96-000124 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 SROS: BSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRECISION OPTICS CORPORATION INC CENTRAL INDEX KEY: 0000867840 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 042795294 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-10647 FILM NUMBER: 96654691 BUSINESS ADDRESS: STREET 1: 22 EAST BROADWAY CITY: GARDNER STATE: MA ZIP: 01440-3338 BUSINESS PHONE: 5086301800 FORMER COMPANY: FORMER CONFORMED NAME: PRECISION OPTICS CORP INC DATE OF NAME CHANGE: 19600201 10QSB 1 PRECISION OPTICS CORPORATION INC. FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 Commission file number 001-10647 PRECISION OPTICS CORPORATION, INC. (Exact name of small business issuer as specified in its charter) Massachusetts 04-2795294 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 22 East Broadway, Gardner, Massachusetts 01440-3338 (Address of principal executive offices ) (Zip Code) (508) 630-1800 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the past 90 days. Yes (X) No ( ) The number of shares outstanding of issuer's common stock, par value $.01 per share, at September 30, 1996 was 5,980,502 shares. Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES INDEX Page PART I. FINANCIAL INFORMATION: Item 1 Consolidated Financial Statements Consolidated Balance Sheets - 1 September 30, 1996 and June 30, 1996 (unaudited) Consolidated Statements of Operations - 2 Three Months Ended September 30, 1996 and September 30, 1995 (unaudited) Consolidated Statements of Cash Flows - 3 Three Months Ended September 30, 1996 and September 30, 1995 (unaudited) Notes to Consolidated Financial Statements 4 Item 2 Management's Discussion and Analysis of 5-7 Financial Condition and Results of Operations PART II. OTHER INFORMATION Items 1-5 Not Applicable Item 6 Exhibits and Reports on Form 8-K - ------ (a) Exhibits - Exhibit 27 (b) Reports on Form 8-K - None
PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS September 30, 1996 June 30, 1996 ------------------ ------------- CURRENT ASSETS Cash and Cash Equivalents $2,393,461 $2,617,813 Accounts Receivable, Net 1,254,688 1,139,804 Inventories 1,839,289 1,863,694 Deferred Tax Asset 157,000 119,000 Prepaid Expenses 57,571 44,684 Refundable Income Taxes 30,276 30,276 ----------- ----------- Total Current Assets 5,732,285 5,815,271 --------- --------- PROPERTY AND EQUIPMENT 2,674,841 2,617,706 Less: Accumulated Depreciation 1,620,868 1,531,228 --------- --------- Net Property and Equipment 1,053,973 1,086,478 --------- --------- OTHER ASSETS 176,432 180,871 ---------- --------- TOTAL ASSETS $6,962,690 $7,082,620 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable $ 513,359 $ 829,428 Accrued Payroll 52,374 81,990 Accrued Professional Services 33,830 49,360 Accrued Profit Sharing and Bonuses 70,826 93,938 Accrued Income Taxes 124,338 35,383 Accrued Vacation 31,232 51,881 Accrued Warranty Expense 50,000 50,000 Current Portion of Capital Lease Obligation 84,341 82,678 Other Accrued Liabilities 9,365 51,638 ----------- --------- Total Current Liabilities 969,665 1,326,296 --------- --------- CAPITAL LEASE OBLIGATION 257,229 278,949 --------- ---------- STOCKHOLDERS' EQUITY Common Stock, $.01 par value- Authorized -- 10,000,000 shares Issued and Outstanding -- 5,980,502 shares 59,805 59,805 Additional Paid in Capital 5,145,655 5,145,655 Retained Earnings 530,337 271,915 ---------- ---------- Total Stockholders' Equity 5,735,796 5,477,375 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,962,690 $7,082,620 ========= =========
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 (UNAUDITED) 1996 1995 ---- ---- REVENUES $2,638,374 $1,993,787 COST OF GOODS SOLD 1,751,022 1,347,195 --------- --------- Gross Profit 887,352 646,592 SELLING GENERAL AND ADMINISTRATIVE EXPENSES 561,736 473,342 ------- --------- Operating Income 325,616 173,250 INTEREST EXPENSE (8,111) (2,607) INTEREST INCOME 26,917 33,859 ------ --------- Income Before Provision for Income Taxes 344,422 205,033 PROVISION FOR INCOME TAXES 86,000 50,000 ----------- --------- Net Income $ 258,422 155,033 ======== ========= INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.04 $ 0.03 ============ =========== WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 6,057,395 6,120,645 ========= =========
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995 (UNAUDITED) 1996 1995 ------------------ ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 258,422 $ 155,033 Adjustments to Reconcile Net Income to Net Cash Provided By (Used In) Operating Activities - Depreciation and Amortization 94,079 52,223 Deferred Income Taxes (38,000) (25,000) Changes in Assets and Liabilities- Accounts Receivable (114,884) 120,984 Inventories 24,405 24,964 Prepaid Expenses (12,887) (15,047) Accounts Payable (316,069) (93,318) Accrued Payroll (29,616) (26,471) Accrued Professional Services (15,530) (13,775) Accrued Profit Sharing and Bonuses (23,112) (50,399) Accrued Income Taxes 88,955 21,734 Other Accrued Liabilities (62,923) (17,556) --------- --------- Net Cash Provided by (Used In) Operating Activities (147,160) 133,372 CASH FLOWS FROM INVESTING ACTIVITIES: Capital Expenditures (57,135) (61,103) Increase in Other Assets -- (5,005) ------------ ---------- Net Cash Used in Investing Activities (57,135) (66,108) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of Capital Lease Obligation (20,057) (6,973) ---------- ----------- Net Cash Used in Financing Activities (20,057) (6,973) ---------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (224,352) 60,291 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,617,813 2,527,846 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,393,461 $2,588,137 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash Paid for- Interest $ 8,111 $ 2,076 ============ =========== Income Taxes $ 35,912 $ 55,912 =========== ==========
-3- PRECISION OPTICS CORPORATION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements include the accounts of Precision Optics Corporation, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the results of the first quarter of the Company's fiscal year 1997. These financial statements do not include all disclosures associated with annual financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company's financial statements for the period ended June 30, 1996 together with the auditors' report filed under cover of the Company's 1996 Annual Report on Form 10-KSB. Income per common and common equivalent share is computed based on the weighted average number of common and common equivalent shares outstanding, where dilutive, during each period. The difference between the average number of shares under the primary and fully diluted calculations is immaterial, and therefore fully diluted earnings per share has not been disclosed in the accompanying financial statements. 2. INVENTORIES Inventories are stated at the lower of cost (first-in, first-out) or market and consists of the following:
September 30, 1996 June 30, 1996 Raw Materials $1,263,166 1,282,924 Work-In-Process 462,698 502,658 Finished Goods and Components 113,425 78,112 ----------- ----------- Total Inventories $1,839,289 1,863,694 ========= =========
-4- PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Important Factors Regarding Forward-Looking Statements When used in this discussion, the words "believes", "anticipates", "intends to", and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. See "Important Factors Regarding Forward-Looking Statements" filed with the Company's Quarterly Report on Form 10-QSB for the period ending March 31, 1996 as Exhibit 99 and incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Liquidity and Capital Resources For the three months ended September 30, 1996, the Company's cash and cash equivalents decreased by approximately $224,000 to $2,393,000. The decrease in cash and cash equivalents was due to cash used by operating activities of approximately $147,000, capital expenditures of approximately $57,000, and repayment of debt of approximately $20,000. The Company intends to continue devoting significant resources to internally-funded research and development spending on both new products and the improvement of existing products. The Company also intends to devote resources to the marketing and product support of its endoscope product line, and the development of new methods of distribution. These investments may temporarily result in negative cash flow, but the Company anticipates that the results of these efforts will translate into increased revenues and profits. Furthermore, depending upon the market acceptance of the Company's products, the Company believes that it may be obligated to acquire new facilities, add additional manufacturing or research and development equipment, or acquire a business that has complementary products or manufactures or sells to the Company components, materials, supplies, or services used in the manufacture, marketing, distribution, or servicing of the Company's new products, as well as the Company's existing products. The Company continues to maintain a secured line of credit of $500,000 available with a bank at 1/4% over the prime rate. -5- The Company's cash and cash equivalents and available lines of credit are considered sufficient to support working capital and investment needs for the foreseeable future. Results of Operations Total revenues for the three months ending September 30, 1996 increased by $644,587, or 32.3% from the same period in the prior year, due primarily to higher sales of medical products (up 242%), partially offset by lower sales of non-medical products (down 29%). The increase in sales of medical products was primarily attributable to higher sales of endocouplers which increased by 260% for the quarter. The reduction in non-medical sales was due primarily to discontinued sales of industrial lenses to a significant customer. This customer accounted for 22% of the Company's revenues for the quarter ended September 30, 1995. Future sales to this customer, if any, are uncertain at this time. Gross profit for the three months ending September 30, 1996 increased from the same period in the prior year by $240,760, and increased as a percentage of revenues from 32.4% in fiscal year 1996 to 33.6% in the current period. The increase in gross profit was due mainly to the higher overall sales volume in the current quarter. Revenues from the Company's two largest customers were approximately 38% and 36% of total revenues for the quarter ended September 30, 1996, and approximately 44% and 22% of total revenues for the quarter ended September 30, 1995. No other customers accounted for more than 10% of the Company's revenues during those periods. For the quarter ended September 30, 1996, approximately 36% of the Company's total revenues were derived from production and development contracts and subcontracts involving the Government and its agencies compared to approximately 47% for the corresponding period of the prior year. The Company's current Government business is substantially comprised of subcontracts with one customer consisting of night-vision advanced development programs on a cost-plus-fixed-fee basis extending approximately through December 1996, and two fixed-price production subcontracts for night-vision lens systems with deliveries scheduled approximately through September 1997. The Government may terminate a government contract at any time, with or without cause. After expiration of the current subcontracts, there can be no assurance that the Government will award future contracts or subcontracts to the Company or the customers to which it sells. Selling, general and administrative expenses increased by $88,394, or 18.7% from the same period in the prior year due primarily to higher research and development expenses. Interest expense relates primarily to capital lease obligations incurred in the third quarter of fiscal years 1994 and 1996. -6- Interest income decreased by $6,742 from the same period in the prior year due to the slightly lower investment base of cash and cash equivalents. The provision for income taxes is based on the Company's estimated effective annual tax rate. This estimated rate is lower than the federal statutory rate primarily due to recognition of available tax credits and future tax deductions not previously benefited. -7- PART II. OTHER INFORMATION Items 1-5 Not Applicable. Item 6 Exhibits and Reports on Form 8-K (a) Exhibits - Exhibit 27 (b) Reports on Form 8-K - There were no reports on Form 8-K filed during the period covered by this report. 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. PRECISION OPTICS CORPORATION, INC. DATE: November 5, 1996 BY: /s/ Jack P. Dreimiller ---------------------- Jack P. Dreimiller Senior Vice President, Finance and Chief Financial Officer -8- EXHIBIT INDEX Exhibit Number Description 27 Financial Data Schedule -9- EX-27 2 FINANCIAL DATA SCHEDULE
5 1 3-MOS JUN-30-1996 SEP-30-1996 2,393,461 0 1,254,688 0 1,839,289 5,732,285 2,674,841 1,620,868 6,962,690 969,665 341,570 0 0 59,805 5,675,992 6,962,690 2,638,374 2,638,374 1,751,002 1,751,002 561,736 0 8,111 344,422 86,000 258,422 0 0 0 258,422 .04 .04
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