-----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, L0/K+YgpSU8NOi0CPWv07iSgme43WaQWPrfQoAzoq/VBunZpqVhFU/T7FOY8jxZG HF8XaydGx5o9tIHFYbvHPg== 0001005477-97-001790.txt : 19970703 0001005477-97-001790.hdr.sgml : 19970703 ACCESSION NUMBER: 0001005477-97-001790 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 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: 97635618 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 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 June 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 July 22, 1996 the Registrant had a total of 6,061,033 shares 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 June 30, 1996 and December 31, 1995 1 Consolidated Statements of Operations-Three and Six Months Ended June 30, 1996 and 1995 2 Consolidated Statements of Cash Flows-Six Months Ended June 30, 1996 and 1995 3 Notes to Unaudited Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 - 7 PART II. OTHER INFORMATION Items 1-6 Not Applicable 8 SIGNATURES 9 INFINITE MACHINES CORP. CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, December 31, 1996 1995 ----------- ----------- ASSETS Current Assets Cash and cash equivalents $ 3,561,478 $ 24,702 Restricted funds 16,331 70,355 Accounts receivable, net of allowance 831,122 909,833 Inventories 170,076 180,546 Other current assets 64,138 134,323 ----------- ----------- Total current assets 4,643,145 1,319,759 Property and equipment, net 3,585,999 3,632,648 Other Assets 186,196 195,880 Notes receivable - stockholders 179,008 214,810 Inventoried parts -- -- Net asset of subsidiary sold pursuant to 399,595 399,595 contractual obligation $ 826,953 $ 368,110 ----------- ----------- Other assets, net 1,591,752 1,178,395 ----------- ----------- Total other assets $ 9,820,896 $ 6,130,802 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 315,439 $ 447,371 Accounts payable and accrued expenses 682,891 786,011 Current maturities of long-term obligations 137,459 140,409 ----------- ----------- Total current liabilities 1,135,789 1,373,791 Long term obligations 7,348,355 4,003,097 Stockholders' equity Common stock, $.001 par value, 20,000,000 shares authorized, 6,007,223 and 5,490,189 shares issued and outstanding 6,130 5,490 Additional paid-in capital 10,134,913 9,029,237 Accumulated deficit $(8,804,291) $(8,280,813) ----------- ----------- Total stockholders' equity 1,336,752 753,914 ----------- ----------- $ 9,820,986 $ 6,130,802 =========== =========== See accompanying notes to unaudited consolidated financial statements 1 INFINITE MACHINES CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Month Periods Six Month Periods Ending June 30, Ending June 30, --------------------------- --------------------------- 1996 1995 1996 1995 --------------------------- --------------------------- Sales $ 1,291,757 1,317,472 $ 2,594,592 2,483,011 Cost of goods sold 837,578 703,459 1,623,414 1,453,870 ----------- --------- ----------- --------- Gross profit 454,179 614,013 971,178 1,029,141 Costs and expenses Operating expenses 21,779 49,277 55,217 84,341 Research and development -- 112,227 -- 261,084 General and administrative expenses 345,043 483,365 688,197 966,162 Selling expenses 132,310 113,269 249,384 212,498 Depreciation and amortization 151,142 177,008 305,260 342,517 ----------- --------- ----------- --------- Total costs and expenses 650,274 935,146 1,298,058 1,866,602 Operating loss 196,095 321,133 326,880 837,461 Other (income) expense Interest and dividend income (11,895) (12,793) (11,902) (17,646) Interest expense 144,506 63,116 233,538 115,405 Loss on sale of equipment -- 42,985 -- 43,723 Other (income) expense (41,874) (13,830) (46,038) (16,734) ----------- --------- ----------- --------- Total other (income) expense 90,737 79,478 175,598 124,748 ----------- --------- ----------- --------- Loss before provision for income taxes 286,832 400,611 502,478 962,209 Provision for income taxes 9,338 -- 21,000 -- ----------- --------- ----------- --------- Net loss $ 296,170 400,611 $ 523,478 962,209 =========== ========= =========== ========= Per share: Net loss per common share $ 0.05 0.08 $ 0.09 0.19 =========== ========= =========== ========= Weighted average number of common shares outstanding 5,574,563 5,131,946 5,574,563 5,131,946 =========== ========= =========== =========
See accompanying notes to unaudited consolidated financial statements 2 INFINITE MACHINES CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended Six Months Ended June 30, June 30, 1996 1995 ---------------- ---------------- Cash flows from operating activities: Net loss $ (523,478) $ (962,209) Ajustments to reconcile net cash used in operating activities Depreciation and amortization 305,260 342,517 Loss (gain) of dispositions of assets -- 43,723 Translation adjustment -- 6,556 Asset write down and allowances 9,684 -- Interest expense for debenture discount 60,222 -- Changes in assets and liabilities: (Increase) decrease in assets Accounts receivable 78,711 (97,609) Other assets 5,292 (90,443) Inventory and inventoried parts 46,272 -- Increase (decrease) in liabilities: Accounts payable and accured expenses (51,261) (59,975) ----------- ----------- Net cash used in operating activities: (69,298) (817,440) Cash flows from investing activities: Available-for-sale securities redemptions 751,973 Purchase of property and equipment (146,561) (537,132) Purchase of other long term assets -- (70,507) Cost of intangibles -- (300) ----------- ----------- Net cash provided by (used in) investing activities (146,561) 144,034 Cash flows from financing activities: Proceeds from convertible debentures net of expenses 3,764,000 -- Borrowings of long term debt 1,250,000 -- Net repayments of short term debt (131,932) (488,800) Repayments of long term obligations (1,363,551) 419,878 Decrease in restricted funds, net 54,025 45,440 Net borrowings of notes payable -- 1,479,784 Proceeds from issuances of common stock 57,593 -- Proceeds from sale of common stock warrants 122,500 -- ----------- ----------- Net cash provided by (used in) financing activities: 3,752,635 616,546 ----------- ----------- Net increase (decrease) in cash and cash equivalents 3,536,776 (56,860) Cash and cash equivalents - beginning of period 24,702 200,879 ----------- ----------- Cash and cash equivalents - end of period $ 3,561,478 $ 144,019 =========== ===========
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 have been prepared 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 six month periods ended June 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. - 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 promissory note and a $1,250,000 term promissory note. This debt was used to refinance existing debt obligations. NOTE 3. - 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 six months of 1996, the Company issued $236,000 of the debentures and $741,000 of the debentures were converted into 400,051 shares of common stock. 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. NOTE 4. - 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 June 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 $60,222 ($.01/share) for the three and six month periods ended June 30, 1996. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The Company had been in the development stage since its formation in October, 1986. Its primary activities, until 1994, had involved development of rotary engines and securing funding for these efforts. In mid-1994, the Company completed its acquisition of HGG Laser Fare, Inc., a contract laser machining, laser applications development and consulting group. Laser Fare was acquired for stock, however, subsequently, funds were advanced by the Parent to meet working capital needs. Today, the Company is primarily involved in the contract laser machining and laser applications business and related activities. The rotary engine development has been suspended since a market for the proposed products failed to develop. Laser Fare operations have been profitable and sales are growing. New equipment purchased during 1995 and 1996 coupled with more aggressive selling have accounted for the growth. Both new customers and increased business with existing accounts have contributed to increased revenue in 1996. The Laser Fare Advanced Technology Group performs technical consulting and manages research and development programs 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 this new technology 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. Also, in the area of advanced manufacturing, the Company has recently entered into a licensing and research agreement with Brown University. The Company has licensed inventions, which will allow high speed and low cost manufacturing of products from glass. It is anticipated that these laser driven processes will find application in manufacture of medical equipment, compact disc production and in micro optical and electro optical devices. 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 modest sales of trial and demonstration items. Sales growth is anticipated in 1997. The Company sold $1,241,000 of Subordinated Convertible Debentures during 1995 through April 1996. The Debentures bear interest at the rate of 7% per annum until maturity on July 21, 2000. The Debentures are convertible into shares at a conversion price equal to 80% of the average closing bid price of the shares on the ten trading days preceding conversion. Through June 30, 1996, $1,141,000 of principal amount of such Debentures had been converted into 608,133 shares of common stock. In addition, the Company's majority shareholder and others have provided funding through promissory notes issued in 1995 and 1996 totaling $907,636, of which $125,000 was converted into 66,489 shares of common stock as of March 31, 1996. The Company completed an additional $4,000,000 private placement financing through the sale of Convertible Debentures in June 1996. These Debentures bear interest at the rate of 5 6% per annum until maturity on June 1, 1998. The Holders of the Debentures may, at any time during the period commencing 45 days after the date of initial issuance, convert up to 33 1/3% of the original principal amount; 60 days after the date of initial issuance, convert up to 66 2/3%; at 90 days after the date of initial issuance, convert all of the principal amount, together with the accrued but unpaid interest thereon, into shares of common stock at a conversion price for each share equal to 75% of the average closing bid price of the shares on the five trading days preceding conversion. At the present time, the Company has adequate working capital, however, growth and expansion plans will most probably 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 $12.5 million, net of expenses, has been provided by debt and equity offerings. As of June 30, 1996, the Company had cash and cash equivalents totaling approximately $3,561,478 available for its working capital needs and planned capital asset expenditures. RESULTS OF OPERATIONS Three Months Ended June 30, 1996 Compared To The Three Months Ended June 30, 1995 Consolidated revenues for the three months ended June 30, 1996 were $1,291,757 and consisted soley of laser division sales. Cost of sales totaled $837,578, and a gross profit of $454,179 was realized for the quarter. Consolidated revenues for the three months ended June 30, 1995 were $1,317,472 and consisted of laser division sales of $1,140,272, and engineering and design sales of $177,200. Cost of sales totaled $703,459, and a gross profit of $614,013 was realized for the three months ended June 30, 1995. Operating expenses for the three months ended June 30, 1996 decreased by $27,498, or 56% from the second quarter of 1995. This decrease was a result of the Company's costs reduction activities. Research and development expenses decreased from $112,227 during the second quarter of 1995 to a negligible amount for the comparable 1996 period, primarily as a result of the suspension of the rotary engine development efforts. General and administrative costs were $345,043 for the three months ended June 30, 1996 as compared to $483,365 during the second quarter of 1995. The decrease of $138,322, or 28.6% was primarily due to cost reductions. Selling expenses were $132,310 for the quarter ended June 30, 1996, as compared to $113,269 for the second quarter of 1995. The increase of $19,041 was a result of increased sales efforts at the laser division. Depreciation and amortization expense totaled $151,142 for the second quarter of 1996, as compared to $177,008 during the second quarter of 1995. Decreased depreciation and amortization expense of $25,866, or 14.6% from the second quarter of 1995, resulted from the write down of engine development assets. 6 During the second quarter of 1996, interest income decreased $898 from the comparable three months period in 1995, due to the reduction in investment securities held. In addition, interest expense was $144,506 during the second quarter of 1996, as compared to $63,116 during the second quarter of 1995. The increase in interest expense of $81,390 was a result of a higher level of debt financing activities and discounts on convertible debentures. The Company had a consolidated net loss of $296,170 for the three months ended June 30, 1996 as compared to the net loss of $400,611 for the three months ended June 30, 1995. Six Months Ended June 30, 1996 Compared to The Six Months Ended June 30, 1995 Consolidated revenues for the six months ended June 30, 1996 were $2,594,592 and consisted solely of laser division sales. Cost of sales totaled $1,623,414, and a gross profit of $971,178 was realized for the period. For the six months ended June 30, 1995, sales totaled $2,483,011 and consisted of laser division sales of $2,136,611, FTD Infinite Ltd. sales of $333,900 and rotary engine development revenue of $12,500. Consolidated cost of sales were $1,453,870 for the first six months of 1995 and the Company realized a gross profit of $1,029,141 for that period. Operating expenses decreased from $84,341 during the first six months of 1995, to $55,217 for the first six months of 1996. The decrease was a result of the company costs reductions activities. Research and development expenses decreased from $261,084 during the first six 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 $688,197 for the six months ended June 30, 1996 from $966,162 for the first six months of 1995. The decrease of $277,965 was primarily due to cost reductions. Selling expenses were $249,384 for the first six months of 1996, compared to $212,498 for the first six months of 1995. The increase of $36,886 was a result of increased sales efforts at Laser Fare. Depreciation and amortization expense totaled $305,260 for the first six months of 1996 compared to $342,517 during the first six months of 1995. Decreased depreciation and amortization expense of $37,257 from prior year period resulted from the year end write down of engine development assets. Interest expense was $233,538 and $115,405 during the six month period ended June 30, 1996 and June 30, 1995, respectively. The increase in interest expense of $118,133 in 1996 was due to interest expense on obligations of acquired laser equipment, accrued interest on notes payable and discounts on convertible debentures. Interest and other income for the first six months of 1996 decreased by $9,372 due to the decreased level of temporary investments and marketable debt securities held. The Company had a consolidated net loss of $523,478 for the six months ending June 30, 1996, as compared to a net loss of $962,209 during the six months ended June 30, 1995. 7 PART II. - OTHER INFORMATION Item 6: During the quarter, the Registrant filed the following reports on Form 8K: Date Item ---- ---- June 18, 1996 Item 5: Brown University License Agreement 8 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 9 EX-27 2 FDS FOR INFINITE MACHINE CORP.
5 This schedule contains summary information extracted from 6/30/96 10-QSB and is qualified in its entirety by reference to such financial statements. US Dollars 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 1 3,577,809 0 861,493 30,371 170,076 4,643,145 4,473,142 887,143 9,820,896 1,135,789 7,348,355 0 0 6,130 1,330,622 9,820,896 2,594,592 2,594,592 1,623,414 1,298,058 175,598 31,903 233,538 (502,478) 21,000 (523,478) 0 0 0 (523,478) (.09) (.09)
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