-----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, HUvWvHnzFWCPdmNSnbvsrzbFi+WmgTtuqzrPBdUk3cp86dAjDWvMtCeNMeOk9V7v xoXMtG/SP/3C7nch5tgtow== 0000906768-96-000012.txt : 19961113 0000906768-96-000012.hdr.sgml : 19961113 ACCESSION NUMBER: 0000906768-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MRS TECHNOLOGY INC CENTRAL INDEX KEY: 0000906768 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] IRS NUMBER: 042904966 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21908 FILM NUMBER: 96659032 BUSINESS ADDRESS: STREET 1: 10 ELIZABETH DRIVE CITY: CHELMSFORD STATE: MA ZIP: 01824-4112 BUSINESS PHONE: 5082500450 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the six month period ended: September 30, 1996 Commission File Number: 0-21908 MRS Technology, Inc. (Exact name of registrant as specified in its charter.) 10 Elizabeth Drive, Chelmsford, MA 01824-4112 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508)250-0450 Former name, former address, and former fiscal year, if changed since last report: Not Applicable Indicated 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 twelve months (or for such shorter period that the registrant was required to file such reports), and 92) has been subject to such filing requirements for the past 90 days. YES (X) NO ( ) Applicable only to Corporate Issuers Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: Outstanding as of Class: November 6, 1996: - ---------------------------- ----------------- Common Stock, par value $.01 6,771,374 MRS Technology, Inc. FORM 10-Q For the six month period ended September 30, 1996 INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at September 30, 1996 (Unaudited) and March 31, 1996 Consolidated Statements of Operations for the Three months ended September 30, 1996 and 1995 (Unaudited) Consolidated Statements of Operations for the Six months ended September 30, 1996 and 1995 (Unaudited) Consolidated Statements of Cash Flows for the Six months ended September 30, 1996 and 1995 (Unaudited) Notes to Consolidated Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES
Part I Financial Information Item 1. Financial Statements MRS Technology, Inc. Consolidated Balance Sheets Assets Sept 30, 1996 Current assets (Unaudited) March 31, 1996 Cash and cash equivalents $ 2,105,602 $ 4,217,880 Accounts receivable, net 2,157,754 1,116,981 Inventories 6,940,842 8,093,014 Deposits 1,063,619 1,024,551 Other current assets 612,494 95,634 - -------------------------------------------------------------------- Total current assets 12,880,311 14,548,060 Property and equipment, net 756,649 1,017,266 Assets held for lease, net 616,740 696,808 Other assets, net 37,921 38,948 - -------------------------------------------------------------------- Total assets $14,291,621 $16,301,082 ==================================================================== Current liabilities Accounts payable $ 799,734 $ 1,867,756 Accrued expenses 1,277,939 1,456,975 Current portion of obligations under capital leases 3,355 3,839 Customer deposits 1,032,515 0 Other liabilities 106,578 97,524 - -------------------------------------------------------------------- Total current liabilities 3,220,121 3,426,094 Long-term portion of obligations under capital leases 9,792 11,165 - -------------------------------------------------------------------- Total liabilities 3,229,913 3,437,259 Stockholders' equity Common stock, $.01 par value; authorized, 20,000,000 shares; issued and outstanding 6,739,035 and 6,674,320 shares respectively 67,390 66,743 Additional paid-in capital 36,322,723 36,246,889 Accumulated deficit (25,328,405) (23,449,809) - -------------------------------------------------------------------- Total stockholders' equity 11,061,708 12,863,823 - -------------------------------------------------------------------- Total liabilities and stockholders' equity $14,291,621 $16,301,082 ==================================================================== The accompanying notes are an integral part of the consolidated financial statements.
MRS Technology, Inc. Consolidated Statements of Operations (Unaudited) Three months ended Sept. 30, Revenues 1996 1995 Product $3,409,389 $1,123,333 Contract research 77,978 1,166,904 --------- --------- Total revenues 3,487,367 2,290,237 Cost of revenues Product 2,623,175 1,089,128 Contract research 77,978 1,166,904 --------- --------- Total cost of revenues 2,701,153 2,256,032 Gross profit 786,214 34,205 Operating expenses: Research and development (Note 1) 721,503 464,559 Selling, general and administrative 687,550 933,881 --------- --------- Loss from operations (622,839) (1,364,235) Interest income, net 28,281 97,187 Interest expense 185 0 Other income (expense), net 0 0 --------- --------- Loss before provision for income taxes (594,743) (1,267,048) Provision for income taxes 0 0 - --------------------------------------------------------------------- Net loss ($594,743) ($1,267,048) ===================================================================== Net loss per share ($0.09) ($0.19) Weighted average number of common shares outstanding (000's) 6,718 6,531 The accompanying notes are an integral part of the consolidated financial statements.
MRS Technology, Inc. Consolidated Statements of Operations (Unaudited) Six months ended Sept. 30, Revenues 1996 1995 Product $4,619,487 $6,082,354 Contract research 578,483 1,480,927 --------- --------- Total revenues 5,197,970 7,563,281 Cost of revenues Product 3,616,894 4,191,697 Contract research 578,493 1,480,927 --------- --------- Total cost of revenues 4,195,387 5,672,624 Gross profit 1,002,583 1,890,657 Operating expenses: Research and development (Note 1) 1,495,815 1,002,964 Selling, general and administrative 1,454,845 2,020,095 --------- --------- Loss from operations (1,948,077) (1,132,402) Interest income, net 74,259 199,977 Interest expense 389 0 Other income (expense), net (816) 0 ---------- --------- Loss before provision for income taxes (1,875,023) (932,425) Provision for income taxes 0 0 - --------------------------------------------------------------------- Net loss ($1,875,023) ($932,425) ===================================================================== Net loss per share ($0.28) ($0.14) Weighted average number of common shares outstanding (000's) 6,702 6,542 The accompanying notes are an integral part of the consolidated financial statements.
MRS Technology, Inc. Consolidated Statements of Cash Flows (Unaudited) Six month period ended Sept. 30, 1996 1995 Cash flows from operating activities Net loss ($1,875,023) ($932,425) Adjustments to reconcile net loss to net cash used in operating activities Depreciation 375,720 343,361 Amortization 1,116 41,363 Changes in assets and liabilities Accounts receivable (1,483,273) 2,134,371 Inventories 1,152,172 (1,495,945) Deposits and other assets (113,428) 469,353 Accounts payable (1,068,022) (511,687) Accrued expenses (179,036) (143,749) Customer deposits from other 1,032,515 (840,000) Other current liabilities 9,054 0 - ------------------------------------------------------------------------- Net cash used in operating activities (2,148,205) (935,358) Cash flows from investing activities Capital expenditures (40,070) (394,081) Payment to ICT 0 (1,000,000) - ------------------------------------------------------------------------- Net cash used in investing activities (40,070) (1,394,081) Cash flows from financing activities Proceeds from stock purchases under employee stock purchase plan 32,556 0 Proceeds from employee stock option exercise 43,925 78,434 Principal payments under capital lease obligations (484) (5,220) ----------------------------------------------------------------------- Net cash provided by financing activities 75,997 73,214 Net decrease in cash & equivalents (2,112,278) (2,256,225) Cash and cash equivalents at beginning of period 4,217,880 8,340,166 Cash and cash equivalents at end of period $2,105,602 $6,083,941 ========================================================================= Supplemental cash flow information Interest paid $389 $9,292 The accompanying notes are an integral part of the consolidated financial statements.
MRS Technology, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The financial statements for the three and six month periods ended September 30, 1996 and 1995 are unaudited and include all adjustments which, in the opinion of management, are necessary to present fairly the financial position at September 30, 1996 and the results of operations and cash flows for the periods then ended. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended March 31, 1996. Certain information and footnote disclosures normally included in the financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full fiscal year. 1. Research and Development Research and product development costs are expensed as incurred. For the six month periods ended September 30, 1996 and 1995, aggregate research and product development costs were $1,984,000 and $2,482,000 respectively including $488,000 and $1,479,000 of costs recovered under research and development contracts. For the three month periods ended September 30, 1996 and 1995, aggregate research and product development costs were $787,000 and $1,179,000, respectively including $66,000 and $714,000 of costs recovered under research and development contracts.
2. Inventories Inventories consist of the following as of September 30, 1996 and March 31, 1996: (In Thousands) September 30, 1996 March 31, 1996 Work in process $5,095 $7,622 Purchased parts 583 471 Finished Goods 1,263 0 ------ ------ $6,941 $8,093
3. Net Loss Per Common Share Net loss per common share for the three and six months ended September 30, 1996 and September 30, 1995 are computed based upon the weighted average number of common shares outstanding. In accordance with the treasury stock method net income per share is calculated based upon the weighted average number of common shares outstanding. Common equivalent shares are not included in loss periods as their effect would be antidilutive. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Private Securities Litigation Reform Act of 1995 ("the Act") provides a new "safe harbor" for forward-looking statements so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statement. The Company desires to take advantage of the new "safe harbor" provisions of the Act. Certain information contained herein, particularly the information appearing under the headings "Business," "Results of Operations," "Financial Condition" and "Factors Affecting Future Results" are forward-looking. Information regarding certain important factors that could cause actual results of operations or outcomes of other events to differ materially from any such forward-looking statement appear together with such statement, and/or elsewhere herein. Overview The Company's ability to obtain product orders and subsequent revenue and profitability is not certain. If the company is not successful in its efforts to obtain product orders, more aggressive cash management actions will be instituted in order to maintain liquidity. These actions may include further work force reductions and decrease in discretionary spending. Additionally, the Company continues to seek strategic relationships with companies which would enhance its ability to commercialize the technology it has developed, strengthen its balance sheet and maximize its long-term success. The specific types of transactions under consideration include equity investments (minority or controlling), debt facilities, research contracts, equipment purchase commitments, or any combination of these transactions. The Company is committed to pursuing a strategy which would maximize its long-term success and increase shareholder value. There is no assurance that either the strategic relationship or actions taken to manage existing cash flows will be successful. If such efforts are not successful liquidity would be adversely affected. RESULTS OF OPERATIONS TOTAL REVENUES Consolidated revenues for the three month periods ended September 30, 1996 and 1995 were approximately $3.5 million and $2.3 million, respectively, an increase of $1.2 million. For the six month period ended September 30, 1996 and 1995 they were $5.2 and $7.6 million, respectively. Total revenues for the first half decreased $2.4 million. Product revenues for the three month period ended September 30, 1996 and 1995, were $3.4 and $1.1 million, respectively an increase of $2.3 million quarter to quarter. This increase was due to the shipment of a PanelPrinter in the current quarter versus no system shipment in the same quarter last year. Revenues for the quarter ended September 30, 1995 were the result of a substantial amount of work to rebuild and re-validate PanelPrinters previously sold to one customer recovering from fire damage in their facility. Total product revenues for the first half of fiscal 1997 decreased by $1.5 million from $6.1 million during the first half of fiscal 1996. This decrease was due to one system sale in the first half of fiscal 1997 versus two systems sales in the first half of fiscal 1996. Contract research revenue for the six month period ended September 30, 1996 and 1995 was $0.6 and $1.5 million, a decrease of $0.9 million year to year. Contract research revenue for the quarters ended September 30, 1996 and 1995 was $0.1 and $1.2 million. These decreases are due to the reduced efforts on the Defense Advanced Research Projects Agency (DARPA) project which should be completed in October 1996. GROSS PROFIT Gross profit as a percentage of total revenues was 23% and 1% for the quarterly periods ended September 30, 1996 and 1995, respectively and was 19% and 25% for the six month periods ended September 30, 1996 and 1995, respectively. Product related gross margins increased 20 percentage points for the quarter ended September 30, 1996 compared to the same period in 1995. The increase in product gross margin for the three month period was primarily due to the shipment of a PanelPrinter in the period ended September 30, 1996 versus the same period ended September 30, 1995 containing only product rework which carries significantly lower margins. Product related gross margins decreased 9 percentage points for the six month period ended September 30, 1996 compared to the same period in 1995. The decrease was attributable to the first six months of fiscal 1996 having two system sales versus one system sale in the first half of fiscal 1997. Contract research margins for both the quarter and six month periods ending September 30, 1996 and 1995 were 0%. Under the current modification to the Company's DARPA contract the contract was changed to a fixed price contract with no additional fee to be billed. OPERATING EXPENSES Research and development includes expenses incurred in support of internal development programs and not allocable to customer funded contract research. Research and development expenses for the three month periods ended September 30, 1996 and 1995 were $0.7 million and $0.5 million, respectively. Aggregate research and development spending before allocation to cost of contract research revenue was $0.8 million and $1.2 million for the same quarterly periods. This $0.2 million increase in spending was primarily a result of lower aggregate costs, mainly expense materials and travel, offset by significantly lower amounts allocable to the DARPA contract in the quarter ended September 30, 1996 compared to the quarter ended September 30, 1995. For the six month periods ended September 30, 1996 and 1995 research and development expenses were $1.5 and $1.0 million, respectively. Aggregate expenses before allocation to cost of contract research was $2.0 and $2.5 million, respectively. The $0.5 million increase for the six month period was attributable to a lower level of effort on the ARPA contract as it enters its final stages. Selling, general and administrative expenses for the three months ended September 30, 1996 and 1995 were $0.7 and $0.9 million, respectively. For the six month periods ended September 30, 1996 and 1995 expenses were $1.5 and $2.0 million, respectively. This decrease of $0.2 million for the quarter and $0.5 for the six month period was primarily attributable to continued efforts to monitor expenses and to take attrition where ever possible and the six month decrease also reflects an unfavorable DARPA rate adjustment in the quarter ended June 30, 1995. LIQUIDITY AND CAPITAL RESOURCES The Company had cash and cash equivalents at September 30, 1996 of $2.1 million, a decrease of $2.1 million from the March 31, 1996 balance of $4.2 million. The decrease in cash is primarily due to the loss from operations in the first half of fiscal 1997. The Company presently has available from a venture leasing company a $1.0 million lease line, which is collateralized by the equipment leased. As of September 30, 1996, this line remains unused. The Company has a working capital line of credit from Fleet Bank in the amount of $7,500,000. Under the current line any advances are at the discretion of the bank, and will be made or not made, in light of the circumstances at the time of the borrower's request for the loan. There are currently no amounts outstanding under this line. Development efforts under the DARPA contact required increases in certain resource levels as activity peaked at various phases of that project. To the extent possible, the Company used temporary and contract resources to meet these peak efforts. It is unlikely that any substantial follow-on funding will be available from DARPA for fully commercializing the technology developed under the DARPA contract. The Company is seeking industrial partners who, through beta-site purchases, contract research funding, minority equity investments, or any combination of these, would provide the funding for this technology to reach its full commercial potential as a product used extensively in high-volume manufacturing applications. To the extent such funding is not obtained, the commercial potential of this technology is considerably more limited, and the result could be products focused more on R&D applications, manufacturing process development and certain OEM subsystem opportunities. The Company's ability to obtain product orders and subsequent revenue and profitability is not certain. If the Company is not successful in its efforts to obtain product orders, more aggressive cash management actions will be instituted in order to maintain liquidity. These actions may include further work force reductions and decreases in discretionary spending. Additionally, the Company is actively seeking strategic relationships with companies which would enhance its ability to commercialize the technology it has developed, strengthen its balance sheet and maximize its long-term success. The specific types of transactions under active consideration include minority equity investments, research contracts, equipment purchase commitments, or any combination of these transactions. There is no assurance that either the strategic relationship or actions taken to manage existing cash flows will be successful. If such efforts are not successful liquidity would be adversely affected. SIGNIFICANT RISKS AND UNCERTAINTIES The ability of the Company to attain the financial or other results that may be planned, forecasted or projected from time to time is subject to a number or risk factors, including the ability to obtain new orders and subsequent revenue, the ability to develop and make new products, the ability to respond to competitive technology and pricing pressures, adequate availability of major components, the ability to maintain key employees for hardware, software, motions and imaging technicians, economic conditions in both the United States and international markets, delays in revenue recognition or contract performance or the inability to obtain new research and development contracts to cover the current level of expenses after completion of the current DARPA contract. The Company may fail to meet any such planned, forecasted or projected results for other reasons than those set forth above. Product Revenue. PanelPrinters and optional equipment generally have ranged in price from $1.8 to $3.0 million and any delay in revenue recognition or cancellation of an order would adversely affect the Company's results of operations, cash flows, or both. Fluctuations in product revenues and consequently quarterly net income or loss, are largely related to revenue recognition on sales of PanelPrinter units. The Company continues to see an increasing number or prospects, but the process for turning these into firm purchasing commitments which can be disclosed is often lengthy. Contract Research. A significant portion of the Company's revenue is derived from research and development contracts with governmental, and in prior years, commercial entities. The most significant of these research funding sources has been DARPA. During fiscal 1996, the Company funded approximately 54% of its aggregate research costs through the government research contract. The Company intends to continue to fund part of its research and development efforts through such contracts. However, there are no assurances that the Company will be successful in obtaining such contracts. The current DARPA contract should be completed in October, 1996. The revenue recognized in the first quarter of fiscal 1997 is substantially all the revenue to be recognized in fiscal 1997 on the DARPA contract. PART II - OTHER INFORMATION Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit 27. Financial Data Schedule b. Reports on Form 8-K No reports have been filed on Form 8-K during this quarter. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, authorized officers. MRS Technology, Inc. Date: November 12, 1996 /s/Griffith L. Resor, III Griffith L. Resor, III President, CEO and Director (Principal Executive Officer) Date: November 12, 1996 /s/ Patricia F. DiIanni Patricia F. DiIanni Treasurer, Chief Financial Officer (Principal Financial Officer) EX-27 2
5 These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended March 31, 1996. 0000906768 MRS TECHNOLOGY, INC. 6-MOS MAR-31-1997 APR-01-1996 SEP-30-1996 2,105,602 0 2,182,754 0 6,940,842 12,880,311 4,834,082 3,460,694 14,291,621 3,220,121 0 0 0 67,390 10,994,318 14,291,621 4,619,487 5,197,970 3,616,894 4,195,387 816 0 389 (1,875,023) 0 0 0 0 0 (1,875,023) (0.28) (0.28)
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