-----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, GBZAijS4LIWftyIJBpYvfSP8oHMNc95pWm2sfbVJMVf0M8btPbYRjVi7vsEx2rNu ERzwoBQktNVvYipwIiTtQA== 0001005477-97-001789.txt : 19970703 0001005477-97-001789.hdr.sgml : 19970703 ACCESSION NUMBER: 0001005477-97-001789 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970702 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFINITE MACHINES CORP CENTRAL INDEX KEY: 0000884650 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 521490422 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21816 FILM NUMBER: 97635613 BUSINESS ADDRESS: STREET 1: 300 METRO CENTER BLVD CITY: WARWICK STATE: RI ZIP: 02886 BUSINESS PHONE: 7028314680 MAIL ADDRESS: STREET 1: 300 METRO CENTER BLVD CITY: WARWICK STATE: RI ZIP: 02886 10QSB/A 1 FORM 10QSB/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- FORM 10-QSB/A ------------- Mark One [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 - ------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934 For the transition period from _____ to _____ Commission File Number 0-21816 INFINITE MACHINES CORP. ----------------------- (Exact name of Registrant as specified in its charter) Delaware 52-1490422 ---------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer of organization) Identification No.) 923 Incline Way, Suite #9, P.O. Box 8219, Incline Village, NV 89452 ------------------------------------------------------------------- (Address of principal executive office) (Zip Code) (702) 831-4680 (Registrant's telephone number, including area code) 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 ----- ----- As of November 8, 1996 the Registrant had a total of 8,528,859 of Common Stock, $.001 par value, outstanding. INDEX ----- INFINITE MACHINES CORPORATION PART 1. FINANCIAL INFORMATION - ----------------------------- Page ---- Item 1. Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets September 30, 1996 and December 31, 1995 1 Consolidated Statements of Operations-Three and Nine Months Ended September 30, 1996 and 1995 2 Consolidated Statements of Cash Flows-Nine Months Ended September 30, 1996 and 1995 3 Notes to Unaudited Consolidated Financial Statements 4 - 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 9 PART II. OTHER INFORMATION - -------------------------- Items 1-6 Not Applicable 9 SIGNATURES 10 - ---------- INFINITE MACHINES CORP. CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, 1996 1995 ------------- ------------ ASSETS Current Assets Cash and cash equivalents $ 1,846,022 $ 24,702 Restricted funds 63,885 70,355 Accounts receivable, net of allowance 721,206 909,833 Inventories 193,789 180,546 Other current assets 128,525 134,323 ------------ ----------- Total current assets 2,953,427 1,319,759 Property and equipment, net 4,057,960 3,632,648 Other Assets Patents and technology 1,333,296 -- Notes receivable - stockholders 167,859 195,880 Inventoried parts 161,107 214,810 Net asset of subsidiary sold pursuant to contractual obligation 399,595 399,595 Other assets, net 998,830 368,110 ------------ ----------- 3,060,687 1,178,395 ------------ ----------- $ 10,072,074 $ 6,130,802 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 300,750 $ 447,371 Accounts payable and accrued expenses 745,569 786,011 Current maturities of long-term debt 158,093 140,409 ------------ ----------- Total current liabilities 1,204,412 1,373,791 Long term obligations 6,818,321 4,003,097 Minority interest in Spectra Acquisition Corp. 422,031 -- Stockholders' equity Common stock, $.001 par value, 20,000,000 6,495 5,490 shares authorized, 6,494,667 and 5,490,189 shares issued and outstanding Additional paid-in capital 12,502,045 9,029,237 Accumulated deficit (10,881,230) (8,280,813) ------------ ----------- Total stockholders' equity 1,627,310 753,914 ------------ ----------- $ 10,072,074 $ 6,130,802 ============ =========== See accompanying notes to unaudited consolidated financial statements 1 INFINITE MACHINES CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Month Period Nine Month Period Ending Sept. 30, Ending Sept. 30, ------------------------- ------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Sales $ 1,161,953 $ 1,184,984 $ 3,756,545 $ 3,667,995 Cost of goods sold 838,461 755,030 2,461,875 2,208,900 ----------- ----------- ----------- ----------- Gross profit 323,492 429,954 1,294,670 1,459,095 Costs and expenses Operating expenses 71,830 34,906 127,047 119,247 Research and development 117,915 101,396 117,915 362,480 General and administrative expenses 386,990 471,273 1,075,187 1,437,435 Selling expenses 127,631 115,717 377,015 328,215 Depreciation and amortization 306,452 212,519 611,712 555,036 ----------- ----------- ----------- ----------- Total costs and expenses 1,010,818 935,811 2,308,876 2,802,413 Operating loss 687,326 505,857 1,014,206 1,343,318 Other (income) expense Interest and dividend income (28,306) (3,949) (40,208) (21,595) Interest expense 1,406,060 81,949 1,639,598 197,354 Loss on sale of equipment -- 1,800 -- 41,923 Other (income) expense 40,674 3,169 (5,364) (9,965) ----------- ----------- ----------- ----------- Total other (income) expense 1,418,428 82,969 1,594,026 207,717 Minority interest in net loss (21,910) -- (21,910) -- ----------- ----------- ----------- ----------- Loss before provision for income taxes 2,083,844 588,826 2,586,322 1,551,035 Provision for income taxes (6,904) -- 14,096 -- ----------- ----------- ----------- ----------- Net loss $ 2,076,940 $ 588,826 $ 2,600,418 $ 1,551,035 =========== =========== =========== =========== Per share: Net loss per common share $ 0.36 $ 0.11 $ 0.44 $ 0.30 =========== =========== =========== =========== Weighted average number of common shares outstanding 5,807,589 5,208,809 5,807,589 5,208,809 =========== =========== =========== ===========
See accompanying notes to unaudited consolidated financial statements 2 INFINITE MACHINES CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Month Periods Ended September 30, ----------------------------------------- 1996 1995 --------------- ---------------- Cash flows from operating activities: Net loss ($2,600,418) ($1,551,035) Ajustments to reconcile net cash used in operating activities Depreciation and amortization 611,712 555,036 Minority interest in net loss (21,910) -- Loss (gain) of dispositions of assets -- 41,923 Translation adjustment -- 2,500 Asset write down and allowances 28,021 -- Interest expense for debenture discount 1,393,555 -- Changes in assets and liabilities: (Increase) decrease in assets Accounts receivable 188,627 (415,963) Other assets (408,743) (147,474) Inventory and inventoried parts 40,460 -- Increase (decrease) in liabilities: Accounts payable and accrued expenses 52,869 146,443 Deferred revenue 147,000 -- ----------- ----------- Net cash used in operating activities: (568,827) (1,368,570) Cash flows from investing activities: Available-for-sale securities redemptions -- 751,973 Purchase of property and equipment (463,873) (757,765) Purchase of other long term assets -- (100,939) Purchase of patents and technology (1,289,500) -- Proceeds from sale of equipment -- 255 Cost of intangibles -- 400 ----------- ----------- Net cash used in investing activities (1,753,373) (106,076) Cash flows from financing activities: Proceeds from convertible debentures, net of expenses 3,764,000 -- Borrowings of long term debt 1,250,000 752,000 Net repayments of short term debt (146,621) (376,417) Repayments of long term obligations (1,366,863) (440,866) Decrease (increase) in restricted funds, net 6,470 (2,296) Net borrowings of notes payable -- 1,548,636 Proceeds from issuance of common stock to minority interests 7,941 -- Proceeds from issuance of preferred stock to minority interests 436,000 -- Proceeds from issuance of common stock 70,093 -- Proceeds from sale of common stock warrants 122,500 -- ----------- ----------- Net cash provided by financing activities 4,143,520 1,481,057 ----------- ----------- Net increase in cash and cash equivalents 1,821,320 (6,411) Cash and cash equivalents - beginning of period 24,702 200,879 ----------- ----------- Cash and cash equivalents - end of period $ 1,846,022 $ 207,290 =========== ===========
See accompanying notes to unaudited consolidated financial statements 3 INFINITE MACHINES CORP. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. - BASIS OF PRESENTATION - ------------------------------- The accompanying unaudited financial statements of Infinite Machines Corp. (the "Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995, which includes audited financial statements and footnotes as of and for the years ended December 31, 1995 and 1994. NOTE 2. - BUSINESS ACQUISITION - ------------------------------ On August 26, 1996, the Company acquired a preferred stock interest in Spectra Acquisition Corp., a Delaware corporation ("SAC"). The aggregate consideration paid for the preferred stock was $2.7 million plus the transfer of certain technology rights which the Company has licensed from Brown University Research Foundation. The cash portion of the purchase price was paid 50% in cash and 50% in a non-interest bearing promissory note. The portion of the promissory note outstanding at September 30, 1996 was $1,050,000. The preferred stock represents in excess of 51% of the voting power of Spectra. Simultaneously with the formation of SAC, SAC acquired substantially all of the assets of Spectra Science Corp. in a business acquisition accounted for under the purchase method of accounting. NOTE 3. - BANK FINANCING - ------------------------ In February 1996, the Company's subsidiary, HGG Laser Fare, Inc., finalized certain financing agreements with a bank that provided for, among other things, a $400,000 revolving line of credit and a $1,250,000 term promissory note. The proceeds were used to refinance existing debt obligations. NOTE 4. - CONVERTIBLE PROMISSORY NOTES - -------------------------------------- At December 31, 1995, $605,000 of 7% convertible debentures due July 2000 were outstanding. The holder may, at his or her sole option, convert all or any part of the outstanding principal amount and accrued and unpaid interest of this note into that number of shares of the common stock of the Company, par value $.001, as is equal to such amount then being converted divided by 80% of the average closing price of the Company's common stock on the ten trading days preceding conversion. During the first nine months of 1996, the Company issued an additional $236,000 of debentures and $741,000 of the debentures were converted into 400,051 shares of common stock. 4 INFINITE MACHINES CORP. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. - CONVERTIBLE PROMISSORY NOTES (CONTINUED) - -------------------------------------------------- In June 1996, the Company completed a $4,000,000 private placement financing through the sale of 6% convertible debentures due June 1998. The holders may, at their sole option, during the period commencing 90 days after the date of issuance, convert all or any part of the outstanding principal amount and accrued and unpaid interest of these notes into that number of shares of the common stock of the Company, par value $.001, as is equal to such amount then being converted divided by 75% of the average closing price of the Company's common stock on the five trading days preceding conversion. During the three months ended September 30, 1996, $966,664 of the debentures were converted into 464,944 shares of common stock. NOTE 5. - RESTATEMENT - --------------------- In March, 1997, the Securities & Exchange Commission (the "SEC"), by letter to the Emerging Issues Task Force of the Financial Accounting Standards Board, adopted a new position on accounting for convertible debt instruments which are convertible at a discount to market. The SEC requires that a portion of the proceeds from the debenture equal to the intrinsic value of that discount feature be allocated to paid in capital, with a corresponding charge to interest expense. Accordingly, the September 30, 1996 financial statements have been restated to conform to the views of the SEC staff. The effect of the change was to increase interest expense and the net loss by $1,333,333 and $1,393,555 ($.23/share) for the three and six month periods ended September 30, 1996, respectively. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL - ------- Since 1993, the Company has been engaged in material processing using sophisticated laser machinery and in research and development programs related to advanced manufacturing and laser applications. During this quarter, the Company acquired the majority ownership of Spectra Acquisition Corporation ("Spectra"), an advanced photonic materials and technology company. During the second quarter, the Company licensed certain photonic technology from Brown University. These licenses have been assigned to Spectra by Infinite Machines Corp. as partial consideration for the acquisition. Spectra holds licenses and owns a number of worldwide patents in the fields of generation of laser light, high performance display phosphor materials and the use of lasers to directly write micro patterns on glass. Spectra is a company in its development stage and currently generates minimal revenues. Management believes that Spectra has technology that will find profitable application in many fields, including identification of products for anti counterfeiting and anti pirating purposes, medical devices, optical display devices and in consumer products that use small scale optics such as compact discs, photo copiers and fax machines. The techniques are also expected to find application in instruments widely used in the biotechnology industry. Although management anticipates rapid growth from Spectra, all current work is developmental and involved in customer trials. There are no assurances that Spectra's anticipated sales growth will be achieved. The Company's Laser Fare subsidiary does contract machining for a broad range of customers. Services include cutting, drilling, welding, marking and engraving. The business is profitable and revenues are growing approximately 20% per year. New equipment purchased during 1995 and 1996 and more focused selling have contributed to sales growth. Management anticipates this trend will continue, however, there are no assurances that this growth will continue. The Advanced Technology Group (a division of Laser Fare) performs technical consulting and contract research and development for industrial customers. In addition to being compensated for services performed, the Advanced Technology Group, in some instances, obtains limited rights to technology created during these development programs. It is expected that these new technologies will provide future opportunities for the Company. One area of concentration is in advanced manufacturing techniques aimed at reducing the time required to bring new products to market. This effort involves work in rapid prototyping and rapid manufacture of tools, such as molds for injection molding. Recently, the Company announced the formation of ExpressTool, Inc., a subsidiary entering the business of rapid tooling and part manufacturing. ExpressTool will utilize proprietary technology stemming from an Advanced Technology Group development program. The subsidiary will, during the balance of 1996, have minimal sales of trial and demonstration items. 6 Management anticipates sales growth in 1997, however, there are no assurances that this will be achieved. In June 1996, the Company completed a $4,000,000 private placement financing through the sale of convertible debentures. The majority of the proceeds were used to complete the acquisition of Spectra. The balance is to be used for general working capital. During the quarter ending September 30, 1996, approximately $966,664 of the debentures were converted into 464,944 common shares. At the present time, the Company has adequate working capital, however, growth and expansion plans will require additional working capital. Management is presently investigating approaches to raising additional capital, including various forms of equity and debt financing. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Company has financed its product development activities through a series of private placements of debt and equity securities and an October, 1993 public offering of common stock. Since its inception, an aggregate of approximately $11 million, net of expenses, has been provided by debt and equity offerings. As of September 30, 1996, the Company had cash and cash equivalents totaling approximately $1,846,022 available for its working capital needs and planned capital asset expenditures. RESULTS OF OPERATIONS - --------------------- Three Months Ended September 30, 1996 Compared To The Three Months Ended - ------------------------------------------------------------------------ September 30, 1995 - ------------------ Consolidated revenues for the three months ended September 30, 1996 were $1,161,953, derived solely from Laser Fare. Cost of sales totaled $838,461, and a gross profit of $323,492 was realized for the quarter. Consolidated revenues for the three months ended September 30, 1995 were $1,184,984 and consisted of laser division sales of $980,384, and engineering and design sales of $204,660. Cost of sales totaled $755,030, and a gross profit of $429,954 was realized for the three months ended September 30, 1995. The engineering and design operations were sold during 1995. Operating expenses for the three months ended September 30, 1996 increased by $36,924 from the third quarter of 1995. This increase was related to expenses associated with the Company's termination of its engine facility. Research and development expenses increased to $117,915 during the third quarter of 1996. This increase was attributable to research and development expense incurred by Spectra, the Company's subsidiary. General and administrative expenses were $386,990 for the three months ended September 30, 1996 as compared to $471,273 during the third quarter of 1995. The decrease of $84,283, or 18%, was primarily due to cost reductions. Selling expenses were $127,631 for the quarter ended September 30, 1996, as compared to $115,717 for the third quarter of 1995. The increase of $11,914 was a result of increased sales efforts at the laser division. 7 Depreciation and amortization expense totaled $306,452 for the third quarter of 1996, as compared to $212,519 during the third quarter of 1995. Increased depreciation and amortization expense of $93,933, or 44%, from the third quarter of 1995, was primarily contributed by amortization of deferred commissions expense for the sale of convertible debentures. During the third quarter of 1996, interest income increased $19,357 from the comparable three month period in 1995, due to interest earned on the proceeds from the June 1996 private placement. In addition, interest expense was $1,406,060 during the third quarter of 1996, as compared to $81,949 during the third quarter of 1995. The increase in interest expense of $1,324,111 was a result of the recognition of the interest charge associated with the discount on the convertible debentures (see Note 5). The Company had a consolidated net loss of $750,511 for the three months ended September 30, 1996 as compared to the net loss of $2,076,940 for the three months ended September 30, 1995. Nine Months Ended September 30, 1996 Compared To The Nine Months Ended - ---------------------------------------------------------------------- September 30, 1995 - ------------------ Consolidated revenues for the nine months ended September 30, 1996 were $3,756,545 and consisted solely of laser division sales. Cost of sales totaled $2,461,875, and a gross profit of $1,294,670 was realized for the period. For the nine months ended September 30, 1995, sales totaled $3,667,995 and consisted of laser division sales of $3,116,995, FTD Infinite Ltd. sales of $538,500 and rotary engine development revenue of $12,500. Consolidated cost of sales were $2,208,900 for the first nine months of 1995 and the Company realized a gross profit of $1,459,095 for that period. Operating expenses increased from $119,247 during the first nine months of 1995, to $127,047 for the first nine months of 1996. The increase was the net result of the Company's cost reduction activities, offset against expenses associated with the termination of the engine facility. Research and development expenses decreased from $362,480 during the first nine months of 1995 to a negligible amount for the comparable 1996 period, primarily as a result of the suspension of the rotary engine development efforts. Expenditures for general and administrative expense decreased to $1,075,187 for the nine months ended September 30, 1996 from $1,437,435 for the first nine months of 1995. The decrease of $362,248 was primarily due to cost reductions. Selling expenses were $377,015 for the first nine months of 1996, compared to $328,215 for the first nine months of 1995. The increase of $48,800 was a result of increased sales efforts at Laser Fare. Depreciation and amortization expense totaled $611,712 for the first nine months of 1996 compared to $555,036 during the first nine months of 1995. Increased depreciation and amortization expense of $56,676 from the prior year period resulted from the purchase of new equipment and amortization of deferred commissions expense incurred in the issuance of convertible debentures. Interest expense was $1,639,598 and $197,354 during the nine month period ended September 30, 1996 and September 30, 1995, respectively. The increase in interest expense of $1,442,244 in 1996 was due to the recognition of the interest charge associated with the discount on the convertible debentures (see Note 5) and interest expense on obligations of acquired laser equipment and notes 8 payable. Interest and other income for the first nine months of 1996 increased by $18,613 due to interest earned on the proceeds of the June 1996 private placement. The Company had a consolidated net loss of $2,600,418 for the nine months ending September 30, 1996, as compared to a net loss of $1,551,036 during the nine months ended September 30, 1995. PART II. - OTHER INFORMATION - ---------------------------- Item 6: Reports on Form 8-K - ------- ------------------- During the quarter the Company issued a Current Report on Form 8-K dated August 26, 1996 pursuant to Item 2 thereof, with respect to the registrant's investment in Spectra Acquisition Corp. 9 SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized. July 2, 1997 INFINITE MACHINES CORP. By: /s/ Clifford G. Brockmyre ----------------------------------- Clifford G. Brockmyre, President and Chief Operating Officer By: /s/ Daniel T. Landi ----------------------------------- Chief Financial Officer 10 EX-27 2 FDS FOR: INFINITE MACHINES CORP.
5 This schedule contains summary financial information extracted from Form 10-2SB 9/30/96 and is qualified in its entirety by reference to such financial statements. 1 US DOLLARS 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1 1,909,907 0 751,577 30,371 193,789 2,953,427 5,555,901 1,497,941 10,072,074 1,204,412 7,277,164 0 0 6,495 1,620,815 10,072,074 3,756,545 3,756,545 2,461,875 2,308,876 1,594,026 41,243 1,639,598 (2,586,322) 14,096 (2,600,418) 0 0 0 (2,600,418) (.44) (.44)
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