UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,JUNE 30, 2000
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OR
|_|/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to______________________ to _______________
Commission file number 0-11668
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INRAD, Inc.
------------------------------------------------------INC.
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(Exact name of registrant as specified in its charter)
New JerseyNEW JERSEY 22-2003247
- --------------------------------------------- ----------------------------------------------------------- ---------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
incorporation or organization) Identification Number)
181 Legrand Avenue, Northvale,LEGRAND AVENUE, NORTHVALE, NJ 07647
---------------------------------------- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(201) 767-1910
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(Registrant's telephone number, including area code)
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(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|/X/ No |_|/ /
Common shares of stock outstanding as of May 1, 2000:
4,176,078 sharesJune 30, 1999:
4,781,178
INRAD, Inc.INC.
INDEX
Page Number
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Part I. FINANCIAL INFORMATION.............................................1
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 2000,
(unaudited) and December 31, 1999.......................1
Consolidated Statements of Operations for the Three
Months Ended March 31, 2000 and 1999 (unaudited)........2
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2000 and 1999 (unaudited)........3
Notes to Consolidated Financial Statements..............4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................5
Changes in Securities and Use of Proceeds...............6
Part II. OTHER INFORMATION.................................................7
Item 6. Exhibits and Reports on Form 8-K........................7
Signatures ...............................................................8
Page Number
-----------
PART I. FINANCIAL INFORMATION.......................................................1
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 2000, (unaudited)
and December 31, 1999.........................................1
Consolidated Statements of Operations for the three and Six
Months Ended June 30, 2000 and 1999 (unaudited)...............2
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2000 and 1999 (unaudited)...............3
Notes to Consolidated Financial Statements....................4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................5
Changes in Securities and Use of Proceeds.....................7
PART II. OTHER INFORMATION...........................................................7
Item 6. Exhibits and Reports on Form 8-K..............................7
SIGNATURES ...........................................................................8
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INRAD, Inc.
Consolidated Balance SheetsINC.
CONSOLIDATED BALANCE SHEETS
March 31, DecemberJUNE 30, DECEMBER 31,
2000 1999*
---- ----
UnauditedUNAUDITED
Assets
Current assets:ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 467,631319,396 $ 377,169
Accounts receivable, net 754,854826,477 741,558
Inventories 1,535,6121,655,882 1,336,285
Unbilled contract costs 215,529 460,713366,080 440,713
Other current assets 96,00484,535 91,970
----------- -----------
Total current assets 3,069,630TOTAL CURRENT ASSETS 3,252,370 3,007,695
----------- -----------
Plant and equipment,PLANT AND EQUIPMENT,
Plant and equipment at cost 5,639,1955,741,684 5,543,244
Less: Accumulated depreciation
and amortization (4,962,770)(5,026,589) (4,898,951)
----------- -----------
Total plant and equipment 676,425715,095 644,293
Precious metals 306,395PRECIOUS METALS 307,265 306,396
Other assets 157,989 154,803OTHER ASSETS 183,829 154,843
----------- -----------
Total assetsTOTAL ASSETS $ 4,210,439 $4,458,559 4,113,227
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 814,740 $752,789 603,458
Advances from customers 11,056 152,608
Other current liabilities 27,92715,304 12,000
----------- -----------
Total current liabilities 853,723TOTAL CURRENT LIABILITIES 779,149 768,066
Secured Convertible Promissory NotesSECURED CONVERTIBLE PROMISSORY NOTES 0 250,000
250,000
Subordinated Convertible Notes --SUBORDINATED CONVERTIBLE NOTES 0 100,000
----------- -----------
Total liabilities 1,103,723TOTAL LIABILITIES 779,149 1,118,066
----------- -----------
Shareholders' equity:SHAREHOLDERS' EQUITY:
Preferred Stock: $1,000 par value; 500 shares issued and
outstanding at March 31,June 30, 2000 and at December 31, 1999 500,000 500,000
Common stock: $.01 par value; 4,180,6784,785,778 shares issued at
March 31,June 30, 2000 and 4,100,678 at December 31, 1999 41,80747,857 41,007
Capital in excess of par value 8,336,9188,900,743 8,237,718
Accumulated deficit (5,757,059)(5,754,240) (5,768,614)
----------- -----------
3,121,666 3,010,1113,694,360 3,010,110
Less - Common stock in treasury,
at cost (4,600 shares at March 31,June 30, 2000 and
at December 31, 1999) (14,950) (14,950)
----------- -----------
Total shareholders' equity 3,106,716TOTAL SHAREHOLDERS' EQUITY 3,679,410 2,995,161
----------- -----------
Total liabilities and shareholders' equityTOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,210,4394,458,559 $ 4,113,227
=========== ===========
* Derived from Audited Financial Statements
See Notes to Consolidated Financial Statements.
1
INRAD, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31
---------------------------
2000 1999
---- ----
Revenues:
Product sales $ 1,099,200 $ 1,415,620
Contract R & D 359,497 249,857
----------- -----------
Total Revenue 1,458,697 1,665,477
----------- -----------
Cost and Expenses:
Cost of goods sold 580,266 1,047,558
Contract R & D expenses 242,265 262,742
Selling, general & administrative expenses 452,110 356,827
Internal R & D expenses 169,478 33,871
----------- -----------
Total Cost and Expenses 1,444,119 1,700,998
----------- -----------
Operating profit (loss) 14,578 (35,521)
Other income (expense):
Interest expense (7,049) (9736)
Interest & other income, net 4,026 1,424
----------- -----------
Net income (loss) 11,555 (44,592)
Accumulated deficit, beginning of period (5,768,614) (5,790,403)
----------- -----------
Accumulated deficit, end of period $(5,757,059) $(5,834,995)INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- ------------------------
2000 1999 2000 1999
---- ---- ---- ----
REVENUES:
Product sales $ 1,481,960 $ 1,384,416 $ 2,581,160 $ 2,800,036
Contract R & D 255,458 314,346 614,955 564,203
----------- ----------- ----------- -----------
Total Revenue 1,737,418 1,698,762 3,196,115 3,364,239
----------- ----------- ----------- -----------
COST AND EXPENSES:
Cost of goods sold 871,721 1,025,566 1,451,987 2,073,124
Contract R & D expenses 296,655 302,349 538,921 565,091
Selling, general & administrative expenses 452,717 378,415 904,827 735,242
Internal R & D expenses 112,586 64,432 282,064 98,303
----------- ----------- ----------- -----------
Total Cost and Expenses 1,733,279 1,770,762 3,177,799 3,471760
----------- ----------- ----------- -----------
OPERATING PROFIT (LOSS) 3,739 (72,000) 18,317 (107,521)
OTHER INCOME (EXPENSE):
Interest expense (4,374) (8,739) (11,423) (18,475)
Interest & other income, net 3,455 2,173 7,481 2,838
----------- ----------- ----------- -----------
NET INCOME (LOSS) 2,819 (78,566) 14,375 (123,158)
ACCUMULATED DEFICIT, BEGINNING OF PERIOD (5,750,059) (5,834,995) (5,790,403) (5,790,403)
----------- ----------- ----------- -----------
ACCUMULATED DEFICIT, END OF PERIOD $(5,754,240) $(5,913,561) $(5,754,240) $(5,913,561)
=========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON SHARE -
(BASIC AND DILUTED 0.01 (0.02) .01 (0.03)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 4,157,769 4,100,678 4,157,769 4,100,678
=========== =========== =========== ===========
Net income (loss) per common share 0.01 (0.01)
=========== ===========
Weighted average shares outstanding 4,127,345 4,100,678
=========== ===========
See Notes to Consolidated Financial Statements.
2
INRAD, Inc.
Consolidated Statements of Cash Flows
(Unaudited)INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months Ended March 31
---------------------------SIX MONTHS ENDED JUNE 30
------------------------
2000 1999
---- ----
Cash flows from operating activities:CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 11,555 $ (44,592)14,374 $(123,158)
--------- ---------
Adjustments to reconcile net income (loss) to cash provided by operating
activities:ADJUSTMENTS TO RECONCILE NET LOSS TO CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 63,819 88,350
Changes in assets and liabilities:127,638 176,999
CHANGES IN ASSETS AND LIABILITIES:
Accounts receivable (13,296) (99,780)(84,919) (114,720)
Inventories (199,327) 138,450(319,597) 330,441
Unbilled contract costs 245,184 (59,991)94,633 (148,607)
Other current assets (4,034) (7,427)7,435 (26,745)
Precious metals 1 (3,760)(869) (4,392)
Other assets (3,146) (1870)(28,986) 116
Accounts payable and accrued liabilities 211,282 85,511149,331 18,383
Advances from customers (141,552) 56,153(13,327)
Other current liabilities 15,9273,304 (8,000)
--------- ---------
Total adjustments 174,858 99,286(193,583) 210,148
--------- ---------
Net cash provided by (used in) operating activities 186,413 143,044NET CASH PROVIDED BY OPERATING ACTIVITIES (179,209) 86,990
--------- ---------
Cash flows from investing activities:CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (95,951) (92,611)(198,440) (167,402)
--------- ---------
Net cash used in investing activities (95,951) (92,611)NET CASH USED IN INVESTING ACTIVITIES (198,440) (167,402)
--------- ---------
Cash flows from financing activities:CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option conversions 319,875 0
Proceeds from issuance of preferred stock 0 200,000500,000
Principal payments of note payable - Bank 0 (37,500)(75,000)
Principal payments of capital lease obligations 0 (2,071)(4,235)
--------- ---------
Net cash provided by (used in) financing activities 0 160,429NET CASH PROVIDED BY FINANCING ACTIVITIES 319,875 420,765
--------- ---------
Net increase (decrease) in cash and cash equivalents 90,462 210,862
Cash and cash equivalents at beginning of periodNET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (57,774) 340,353
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 377,169 208,028
--------- ---------
Cash and cash equivalents at end of periodCASH AND CASH EQUIVALENTS AT END OF PERIOD $ 467,631319,395 $ 418,890548,381
========= =========
See Notes to Consolidated Financial Statements.
3
INRAD, Inc.
Notes to Consolidated Financial Statements
(Unaudited)INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -SUMMARY1-SUMMARY OF ACCOUNTING POLICIES
Basis of PresentationBASIS 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, 1999 and 1998 and for the
years then ended and notes thereto included in the Company's report on Form
10-K, filed with the Securities and Exchange Commission.
Inventory Valuation
For the period ended March 31, 2000 inventories are valued on a lower of cost
(first-in-first-out basis) or market basis (net realizable value). Work In
Process inventory for the period is stated at actual cost, not in excess of
estimated realizable value. For the period ended March 31, 1999, interimINVENTORY VALUATION
Interim inventories as well as cost of goods sold wereare 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.
Income Taxesyear, 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. A
valuation allowance is established when deferred tax assets are not likely to be
realized.
Net Income (Loss) Per ShareNET LOSS PER SHARE
Basic and diluted net income (loss)loss per share is computed using the weighted average
number of common shares outstanding. The potential dilutive effect of securities
which are common share equivalents, options, warrants,warrents, convertible notes and
convertibleconvertilbe preferred stock, have been excluded from the diluted computation
because their effect is antidilutive.
NOTE 2 -DEBT
Secured Convertible Promissory Note2-INVENTORIES AND COST OF GOODS SOLD
For the six month period ended June 30, 2000, the Company used 56% as its
estimated cost of goods sold percentage. For the previous year, 1999, the actual
cost of goods sold percentage was 68.9%. The Promissory note has been classifiedCompany believes 56% better
approximates the expected 2000 annual cost of goods sold percentage based on
estimated profitability of actual sales through June 30, 2000 and the
anticipated annual level of product shipments and related costs.
For the six month period ended June 30, 1999, the Company used 74% as non-current inits
estimated cost of goods sold percentage.
NOTE 3-DEBT CONVERSION
SECURED CONVERTIBLE PROMISSORY NOTE
On June 15, 2000 the accompanying
balance sheet because the Note holder has agreed not to demand payment prior to
April 1, 2001.
Subordinated Convertible Notes
During September 1993, the company borrowed $100,000 in the form of a promissory
note from a shareowner of the Company. On December 16, 1993, thesecured convertible promissory note was extinguished and a $74,621 10% subordinated convertible note and 20,303converted into
200,000 shares of the Company's commons stock at $1.25 were issued. The note is
convertible at any time up to the maturity date into shares of the Company'sINRAD, Inc. common stock at $1.25 per share (to be adjusted for dividends, stock splits,
etc.).stock.
4
SUBORDINATED CONVERTIBLE NOTE
On March 15, 2000 the subordinated convertible note along with its accrued interest through
December 31, 1999 was converted into 80,000
shares of the Company'sINRAD, Inc. common stock.
4
NOTE 4-EXERCISE OF WARRANTS
On June 15, 2000 345,000 warrants were exercised and 345,000 of shares of
INRAD, Inc. was issued for capital received of $314,375.
NOTE 5-PREFERRED STOCK
The company sold 200 shares of its Series A 10% Convertible Preferred Stock for
$200,000 on March 25, 1999 and 300 shares on June 25, 1999. There was one
purchaser, an institution that was a majority shareholder of the Company prior
to the purchase. The series A Preferred Stock is convertible into Common Stock
of the Company at the rate of $1.00 per share.
NOTE 6-COMMITMENTS
There are in effect employment agreements with two officers of the Company that
call for a base compensation to be mutually agreed upon at renewal. Early
termination of the agreements will result in a severance payment of between six
and nine months of base compensation. The minimum aggregate payouts under such
contracts approximate $139,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following information contains forward-looking statements, including
statements with respect to the revenues to be realized from existing backlog
orders and ability to generate sufficient cash flow in the future. The Company
wishes to insure that any forward-looking statements are accompanied by
meaningful cautionary statements in order to comply with the terms of the safe
harbor provided by the Private Securities Reform Act of 1995. Actual results may
vary from these forward-looking statements due to the following factors:
inability to maintain customer relationships and/or add new customers;
unforeseen overhead expenses that may adversely affect financial results or
other inability to operate with a positive cash flow. Readers are further
cautioned that the Company's financial results can vary from quarter to quarter,
and the financial results reported for the first threesix months may not necessarily
be indicative of future results. The foregoing is not intended to be an
exhaustive list of all factors which could cause actual results to differ
materially from those expressed in forward-looking statements made by the
Company. For more information about the Company, please review the Company's
most recent Form 10-K filed with the Securities & Exchange Commission.
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.
Net5
NET PRODUCT SALES
Product Sales
Net product sales for the firstsecond quarter of 2000 were $1,099,000$1,482,000 vs. $1,415,000$1,384,000 for
the firstsecond quarter of 1999. Sales for the first half of FY 2000 totaled
$2,581,000 vs. $2,800,000 for the first half of 1999 Product sales were lower compared to thein
this year's first quarter of
1999half due to a larger portion of the backlog being scheduledcontinued weakness in orders for delivery later
in the current fiscal year when compared to shipment schedules in the first
quarter of 1999. Also, shipments of the Company's
Systems and& Instruments product line were well below first quarter 1999 levels.
Newlines.
Product bookings for the quarter were at $1,609,000, resulting$1,758,000 vs. $692,000 for the same
period last year. Product bookings for the first half of the year were
$3,367,000 vs. $2,405,000 for the same period in a $512,000 (35%) increase1999. The book-to-bill ratio
for the first half was 1.30 vs. 0.86 for the first half of 1999. Increased
orders in unfilledthe Company's Crystals & Components product lines and Custom Optics
business more than offset the decline in orders for the quarter.Company's Systems &
Instruments.
Backlog at March 31,June 30, 2000 $1,946,000was $2,272,000 compared to $1,438,000 on December 31,
1999 and $1,733,000$1,031,000 on March 31,June 30, 1999.
Cost of Goods Sold
CostCOST OF GOODS SOLD
For the six months period ended June 30, 2000, the Company used 56% as its
estimated cost of goods sold decreased in comparison topercentage. For the same period in 1999 due to
lowerprevious year the actual cost
of goods sold percentage was 68.9%. The Company believes 56% better approximates
the expected 2000 annual cost of goods sold percentage based on interim physical
inventories, estimated profitability of actual sales volumethrough June 30, 2000, and
increased cost efficiencies. Coststhe anticipated annual level of product shipments and related costs for the
quarter, were
determined utilizing perpetual inventory records adjusted to net realizable
value.balance of the year.
For the three-six month period ended March 31,June 30, 1999, the Company used 74% as its
estimated cost of goods sold as a percentage of product revenues. For the
full year 1999, the actual cost of good sold percentage was 68.9%. Cost of goods
sold percentage for the three-month period ended March 31, 2000 improved to 53%.
Contract Research and Developmentpercentage.
CONTRACT RESEARCH AND DEVELOPMENT
Contract research and development revenues were $359,000$615,000 for the threesix months
ended March 31,June 30, 2000, compared to $250,000$564,000 for the threesix months ended March 31,June 30,
1999. Current period revenues included a one-time adjustment for under-absorbed
overhead costs of $130,000. Related contract research and development expenditures, including
allocated indirect costs, for the quartersix months ended March
31, 2000June 30, 1999 were $242,000$539,000
compared to $263,000$565,000 for the comparable 1999 quarter. Revenues for the second
quarter were $255,000 compared to $314,000 in the second quarter of 1999.
Overall revenues increased from 1999 to 2000 due to a one-time adjustment for
under-absorbed overhead costs in the amount of $130,000, taken in the first
quarter.
The Company's backlog of contract R&D was $730,000$494,000 at March 31,June 30, 2000, compared
with $1,089,000$1,109,000 at December 31, 1999 and $1,101,000$1,096,000 at March 31,June 30, 1999. 5
Selling, General and Administrative ExpensesNo new
Contract R&D contracts were awarded to the company during the first half of FY
2000 vs. awards of $285,000 during the first half of 1999. The Company expects
to continue to focus its future efforts on technology programs closely aligned
with its core business.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased $74,000 or 20%, compared
to $451,000 in the firstsecond quarter of 2000 compared to $357,000 in the same period in the prior year.1999. Both Selling general and administrativeG&A expenses increased over the
1999 second quarter due to the hiring of a
new president, new salesincreases in personnel and other increased selling and personnel
costs.
Internal Research and Development Expensesrelated expenses.
INTERNAL RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the quarter ended March 31,June 30, 2000 were
$169,000$113,000 compared to $34,000$64,000 for the quarter ended March 31,June 30, 1999. The increase
reflects a major effortis primarily due to develop and demonstrate a Optical Parametric
Oscillator prototype operatingincreased expenditures in the infrared wave banddevelopment efforts for
applicationtunable mid-IR laser technology for which paths to market are being explored. In
general, other than tunable mid-IR laser technology the Company is focusing its
internal Research and Development efforts in 1999 on a few new class of scientific instruments.
Interest Expenseproducts with
short development cycles.
INTEREST EXPENSE
Interest expense was $7,000$4,000 and $10,000$9,000 for the quarters ended March 31,June 30, 2000 and
1999, respectively. Interest expense is less in 20001999 because on September
30, 1999 the Company completed payment of the bankMarch 15, 2000 a
100,000, 10% subordinated convertible note was converted to common stock and a
loan payable to Chase Manhattan Bank.Bank was paid in full in September 1999.
6
LIQUIDITY AND CAPITAL RESOURCES
In March 1999,During the quarter a shareownershareholder exercised 345,000 warrants and debtholderreceived 345,000
shares of INRAD, Inc. common stock. The warrants had exercise prices of $.6875
and $1.25 per warrant that resulted in paid in capital to the Company agreedof
$314,375. Management is actively seeking additional working capital and
anticipates it will be forthcoming. The additional working capital and cash
generated from operations will be utilized to purchase 500
shares of 10% convertible preferred stock atexpand and upgrade production
capacity and for working capital required by the price of $1,000 per share. Two
hundred shares were purchased for $200,000increase in March 1999 and the remaining three
hundred shares were purchased in June 1999 for $300,000. Dividends are payable
in common stock at the rate of $1.00 per share.production orders.
Capital expenditures, including internal labor and overhead charges, for the threesix
months ended March 31, 2000June 30, 20000 and 1999 were $96,000$198,000 and $93,000,$167,000, respectively.
The Company expects the rate of capital expenditures to increase during the
year. The increases are a direct result of increases in production orders and
are required to increase capacity and to allow for greater product run rates. As
long as cash flows from operations are adequate and/a result, it is anticipated that additional capital infusion or other
financing terms can be arranged, managementborrowings will
continuetake place throughout the year to make investments infund these capital acquisitions to insure that the Company maintains a competitive edge in
the market place.
During the three month period ended March 31,requirements.
YEAR 2000 and for the prior fiscal year
the Company generated a profit. Cash outflows during these periods have been
funded on the basis of issuance of preferred stock to, shareowners, as further
described in the Company's Annual Report on Form 10-K. The Company's liquidity
is dependent upon its ability to continue to improve operating results and
thereby generate adequate cash flow from operations. Through the current quarter
and for the three years in the period ended December 31, 1999 the company has
generated positive cash flow from operations. Management anticipates that cash
flow from operations will continue to remain positive
Year 2000 IssueISSUE
The Company has satisfactorily implemented a plan to ensure that its systems are
compliant with the requirements to process transactions in the year 2000. To
date, the Company has not experienced any adverse affects related to the year
2000.
6
CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company sold 200 shares of its Series A 10% Convertible Preferred Stock for
$200,000 on March 25, 1999 and 300 shares on June 25, 1999. There was one
purchaser, an institution that was a major shareholder of the Company prior to
the purchase. The Series A Preferred Stock is convertible into Common Stock of
the Company at a rate of $1.00 per share. The issuance of the Series A Preferred
Stock was, and the issuance of the underlying Common Stock, if converted, will
be, exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, as not involving public offering.
During the quarter a shareholder exercised 345,000 warrants and received 345,000
shares of INRAD, Inc. common stock. The warrants had exercise prices of $.6875
and $1.25 per warrant that resulted in a cash infusion to the Company of
$314,375.
During the quarter the same shareholder converted a 10% convertible secured note
and received 200,000 shares of the Company's common stock.
The issuance Common Stock will be exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended, as it is not involving a public
offering.
In addition to the above, 50,000 shares of common stock were issued as a 10%
dividend on the Series A 10% Convertible Preferred Stock
PART II. OTHER INFORMATION
ITEM 5. APPOINTMENT OF CHIEF EXECUTIVE OFFICER
On May 5, 2000 Dr. Warren Ruderman retired as Chief Executive Officer after
twenty seven years as founder and leader of the Company. Mr. Daniel Lehrfeld,
the Company president, was appointed to the position. Tom Lenagh was elected
Chairman of the Board, a position also formerly held by Dr. Ruderman. Dr.
Ruderman will remain as a Director of the Company.
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.
7
27. Financial Data Schedule.
(B) Reports on Form 8-K:
None.
7
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.INC.
By: /s/ Daniel Lehrfeld
-----------------------------------------------
Daniel Lehrfeld
President and Chief Executive Officer--------------------------------------------
DANIEL LEHRFELD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /s/ William S. Miraglia
-----------------------------------------------
William--------------------------------------------
WILLIAM S. Miraglia
Chief Financial OfficerMIRAGLIA
CHIEF FINANCIAL OFFICER
(Chief Accounting Officer)
Date: May 10,August 1, 2000
8