UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| (Mark One) | |
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedApril 28, 2012. |
| or | |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ______________. |
Commission File Number: 0-1455
OPT-SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
| NEW JERSEY | 21-0681502 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 1912 BANNARD STREET, CINNAMINSON, NEW JERSEY | 08077 |
| (Address of principal executive offices) | (Zip Code) |
(856) 829-2800
(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 þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | Smaller reporting company | þ |
| (Do not check if smaller reporting company) | |||
Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act). YES o NO þ
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date: 775,585 Shares of Common Stock, par value $0.25, were outstanding as of June 12, 2012.
Opt-Sciences Corporation
FORM 10-Q SECOND QUARTER REPORT - FISCAL YEAR 2012
TABLE OF CONTENTS
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Opt-Sciences Corporation
CONSOLIDATED BALANCE SHEETS
ASSETS
| April 28, 2012 (Unaudited) | October 29, 2011 | |
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ 1,594,611 | $ 1,751,489 |
| Trade accounts receivables | 1,112,833 | 907,576 |
| Inventories | 809,940 | 756,721 |
| Prepaid expenses | 10,811 | 24,015 |
| Deferred income taxes | -0- | 42,761 |
| Prepaid income taxes | 60,018 | -0- |
| Loans and exchanges | 10,988 | 13,888 |
| Accrued interest receivable | 79,620 | 87,482 |
| Marketable securities | 7,885,965 | 7,620,449 |
| Total current assets | 11,564,786 | 11,204,381 |
| PROPERTY AND EQUIPMENT | ||
| Land | 114,006 | 114,006 |
| Building and improvements | 532,978 | 532,978 |
| Furniture and equipment | 2,145,896 | 2,137,276 |
| Automobiles | 43,268 | 43,268 |
| Total property and equipment | 2,836,148 | 2,827,528 |
| Less accumulated depreciation | 2,081,562 | 2,010,575 |
| Net property and equipment | 754,586 | 816,953 |
| OTHER ASSETS | ||
| Deposits | 2,837 | 2,837 |
| Total assets | $ 12,322,209 | $ 12,024,171 |
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Opt-Sciences Corporation
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
| April 28, 2012 (Unaudited) | October 29, 2011 | |
| CURRENT LIABILITIES | ||
| Accounts payable - trade | $ 163,168 | $ 99,284 |
| Accrued Income taxes | -0- | 172,010 |
| Accrued salaries and wages | 128,479 | 177,230 |
| Accrued professional fees | 45,925 | 85,925 |
| Deferred income taxes | 59,779 | -0- |
| Other current liabilities | 9,592 | 3,194 |
| Total current liabilities | 406,943 | 537,643 |
| STOCKHOLDERS' EQUITY | ||
| Common capital stock -par value $0.25 per share - | ||
| authorized and issued 1,000,000 shares | 250,000 | 250,000 |
| Additional paid in capital | 272,695 | 272,695 |
| Retained earnings | 11,555,019 | 11,264,161 |
| Accumulated other comprehensive income: | ||
| Unrealized gain (loss) on marketable securities | 24,770 | (113,110) |
| Less treasury stock at cost - 224,415 shares | (187,218) | (187,218) |
| Total stockholders' equity | 11,915,266 | 11,486,528 |
| Total liabilities and stockholders'equity | $ 12,322,209 | $ 12,024,171 |
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Opt-Sciences Corporation
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (Unaudited)
| Thirteen Weeks Ended April 28, 2012 | Thirteen Weeks Ended April 30,2011 | Twenty-Six Weeks Ended April 28, 2012 | Twenty-Six Weeks Ended April 30, 2011 | ||
| NET SALES | $ 1,629,022 | $ 1,470,775 | $ 3,015,636 | $ 3,296,917 | |
| COST OF SALES | 1,218,354 | 996,674 | 2,239,235 | 2,205,194 | |
| Gross profit on sales | 410,668 | 474,101 | 776,401 | 1,091,723 | |
| OPERATING EXPENSES | |||||
| Sales & delivery | 3,967 | 3,141 | 10,007 | 10,311 | |
| General and administrative | 218,564 | 241,920 | 443,370 | 465,300 | |
| Total operating expenses | 222,531 | 245,061 | 453,377 | 475,611 | |
| Operating income | 188,137 | 229,040 | 323,024 | 616,112 | |
| OTHER INCOME | 65,238 | 12,976 | 170,033 | 28,747 | |
| Income before taxes | 253,375 | 242,016 | 493,057 | 644,859 | |
| FEDERAL AND STATE INCOME TAXES | 103,900 | 99,200 | 202,200 | 264,400 | |
| Net income | 149,475 | 142,816 | 290,857 | 380,459 | |
| RETAINED EARNINGS - | |||||
| beginning of period | 11,405,544 | 10,639,144 | 11,264,162 | 10,401,501 | |
| RETAINED EARNINGS - | |||||
| end of period | $ 11,555,019 | $ 10,781,960 | $ 11,555,019 | $ 10,781,960 | |
| EARNINGS PER SHARE OF | |||||
| COMMON STOCK | $ 0.19 | $ 0.18 | $ 0.38 | $ 0.49 | |
| Average shares of stock outstanding | 775,585 | 775,585 | 775,585 | 775,585 |
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Opt-Sciences Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Twenty-Six Weeks Ended April 28, 2012 | Twenty-Six Weeks Ended April 30, 2011 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 290,857 | $ 380,459 |
| Adjustments to reconcile net income to net | ||
| cash provided (used) by operating activities: | ||
| Depreciation | 70,988 | 72,641 |
| Loss on sale of securities | $ 34,900 | $ -0- |
| Decrease (increase) in: | ||
| Trade accounts receivable | (205,257) | 65,193 |
| Inventories | (53,219) | (36,607) |
| Prepaid expenses | 13,204 | (422) |
| Prepaid income taxes | (60,018) | -0- |
| Loans and exchanges | 2,900 | (1,650) |
| Accrued interest receivable | 7,862 | (60,161) |
| (Decrease) increase in: | ||
| Accounts payable | 63,884 | (1,180) |
| Accrued income taxes | (172,010) | 3,775 |
| Accrued salaries and wages | (48,751) | (48,018) |
| Accrued professional fees | (40,000) | (37,578) |
| Other current liabilities | 6,398 | 4,483 |
| Net cash provided (used) by operating activities | (88,262) | 340,935 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property and equipment | (8,620) | -0- |
| Purchases of securities | (315,408) | (7,086,719) |
| Proceeds from sales of securities | 255,412 | -0- |
| Net cash (used) by investing activities | (68,616) | (7,086,719) |
| (Decrease) in cash | (156,878) | (6,745,784) |
| Cash and cash equivalents at beginning of period | 1,751,489 | 8,398,276 |
| Cash and cash equivalents at end of period | $ 1,594,611 | $ 1,652,492 |
| SUPPLEMENTAL DISCLOSURES: | ||
| Income taxes paid | $ 434,228 | $ 130,625 |
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Opt-Sciences Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of Opt-Sciences Corporation, Inc. and its wholly-owned subsidiary, O&S Research, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.
These consolidated financial statements have been prepared by the Company, without audit, and reflect normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the results for the first twenty-six weeks of the Company's fiscal year 2012. These consolidated financial statements do not include all disclosures associated with annual consolidated financial statements and, accordingly, should be read in conjunction with footnotes contained in the Company's consolidated financial statements for the year ended October 29, 2011 together with the auditors' report filed as part of the Company's 2011 Annual Report on Form 10-K.
The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
2. INVENTORIES
Inventories consisted of the following:
| April 28, 2012 (Unaudited) | October 29, 2011 | ||
| Raw materials and supplies | $ 389,907 | $ 336,176 | |
| Work in progress | 301,458 | 309,769 | |
| Finished goods | 118,575 | 110,776 | |
| Total Inventory | $ 809,940 | $ 756,721 |
End of quarter inventories are stated at the lower of cost (first-in, first-out) or market. The inventory included in unaudited quarterly financial statements and in this Form 10-Q is based on estimates derived from an unaudited physical inventory count of work-in-progress and raw materials. The Company provides for estimated obsolescence on unmarketable inventory based upon assumptions about future demand and market conditions. If actual demand and market conditions are less favorable than those projected by management, additional inventory write downs may be required. Inventory, once written down, is not subsequently written back up, as these adjustments are considered permanent adjustments to the carrying value of the inventory. The Company conducts an audited physical inventory at the end of the fiscal year in connection with its audited financial statements and preparation of its Form 10-K.
3. REVENUE RECOGNITION
The Company recognizes revenue in accordance with U.S. GAAP and SEC Staff Accounting Bulletin ("SAB") No. 104, Revenue Recognition. SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the price to the buyer charged for products delivered or services rendered and collectability of the sales price. The Company assesses credit worthiness of customers based upon prior history with the customer and assessment of financial condition. The Company's shipping terms are customarily FOB shipping point.
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4. FINANCIAL INSTRUMENTS
SFAS No. 157 (ASC 820), "Fair Value Measurements", requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. SFAS No. 157 (ASC 820) establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
SFAS No. 157 (ASC 820) prioritizes the inputs into three levels that may be used to measure fair value:
| Level 1 | applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. |
| Level 2 | applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. |
| Level 3 | applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. |
The Company's financial instruments consist principally of cash, cash equivalents, marketable securities, trade accounts receivable, accounts payable and accrued liabilities. Pursuant to SFAS No. 157 (ASC 820), the fair value of our cash equivalents and marketable securities is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued Accounting Standards Update No. 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and IFRS ("ASU 2011-04"), which amends ASC 820 Fair Value Measurement. ASU 2011-04 improves the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and International Financial Reporting Standards. The amended guidance changes the wording used to describe many requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. Additionally, the amendments clarify the FASB's intent about the application of existing fair value measurement and disclosure requirements. Although ASU 2011-04 is not expected to have a significant effect on practice, it changes some fair value measurement principles and disclosure requirements. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011, and must be applied prospectively. Early application is not permitted. We do not anticipate that the adoption of ASU 2011-04 will have a material impact on our financial position or results of operations.
In June 2011, the FASB issued the FASB Accounting Standards Update No. 2011-05 "Comprehensive Income" ("ASU 2011-05"), which was the result of a joint project with the IASB and amends the guidance in ASC 220, Comprehensive Income, by eliminating the option to present components of other comprehensive income (OCI) in the statement of stockholders' equity. Instead, the new guidance now gives entities the option to present all non-owner changes in stockholders' equity either as a single continuous statement of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income. The amendments in this Update should be applied retrospectively and are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. This statement will be effective for us for our 2013 fiscal year. We do not anticipate that the adoption of ASE 2011-05 will have a material impact on our financial position or results of operations.
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6. SUBSEQUENT EVENTS
The Company is not aware of any event that occurred subsequent to the balance sheet date but prior to the filing of this report that could have a material impact on our financial position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
We make statements in this Report, and we may from time to time make other statements, regarding our outlook or expectations for earnings, revenues, expenses and/or other matters regarding or affecting the Company that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words such as "believe", "expect", "anticipate", "intend", "outlook", "estimate", "forecast", "project" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. We do not assume any duty and do not undertake to update our forward-looking statements. Actual results or future events could differ, possibly materially, from those that we anticipated in our forward-looking statements, and future results could differ materially from our historical performance. Our forward-looking statements are subject to the following principal risks and uncertainties:
- Uncertain demand for the Company's products because of the current international financial concerns;
- Risks associated with dependence on a few major customers;and
- The performance, financial strength and reliability of the Company's vendors.
We provide greater detail regarding other factors in our 2011 Form 10-K.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management's discussion and analysis of financial condition and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Specifically, inventory is estimated quarterly and reconciled at the end of the fiscal year when a comprehensive physical count is conducted (also see Notes to Consolidated Financial Statements, Note 1 Summary of Significant Accounting Policies and Note 2 Inventories).
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EXECUTIVE SUMMARY
Opt-Sciences Corporation, through its wholly owned subsidiary, O & S Research, Inc., both New Jersey corporations, manufactures anti-glare and transparent conductive optical coatings which are deposited on glass used primarily to cover instrument panels in aircraft cockpits. The Company's business is highly dependent on a robust commercial, business, regional and military aircraft market. We recorded second quarter sales of $1,629,022 and net income of $149,475. Sales are up 18% or $242,408 from the first quarter of Fiscal Year 2012. Compared to the second quarter of 2011, sales are up 11% or $158,247. We currently expect third quarter sales to be approximately $1,700,000. Sales seem to have improved from recent lows. We look for an increase in sales of conductive coated instrument panels and improved sales in all our major markets. Nevertheless, international financial concerns combined with political unrest in the Middle East (resulting in higher oil prices) may affect aircraft users and purchasers by inhibiting their ability to finance and their desire to purchase new airplanes and their ability and desire to upgrade existing aircraft. During the second quarter of 2012, the Company booked $1,949,000 in new orders compared to $1,703,000 in new orders booked for the first quarter of 2012 and $1,369,000 in new orders booked in the second quarter of 2011. Our backlog of unshipped orders was approximately $3,103,000 at the end of second quarter, up $321,000 from the end of the first quarter of 2012 and up $1,341,000 from the second quarter of 2011.
Even though we have experienced a significant increase in backlog recently, a substantial portion of that backlog is scheduled for delivery in later periods of this Fiscal Year. Based on our customer's needs, which change from time to time, our customers may accelerate or defer delivery dates; and we typically try to accommodate their needs if we have available manufacturing capacity and access to the required raw materials. We generally have a four to twelve week delivery cycle depending on product complexity, plant capacity and lead time for raw materials, such as polarizers or filter glass. Our sales tend to fluctuate from quarter to quarter, because all orders are custom manufactured and customer orders are generally scheduled for delivery based on our customer's need date and not based on our ability to make shipments. Since the Company has two customers that together represent over 60% of sales, any significant change in the requirements of either of those customers has a direct impact on our revenue for the quarter. In addition, a recent announcement by one of our competitors, Metavac, that it is shutting its facility as of the end of September, 2012 has stimulated inquiries and requests for proposals from certain of Metavac's customers. Although the industry has more than enough excess capacity to absorb Metavac's business, we anticipate that this closing may lead to increases in our sales of glass with conductive coatings.
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED APRIL 28, 2012 COMPARED WITH THIRTEEN WEEKS ENDED APRIL 30, 2011
NET SALES
Net sales for the second quarter ended April 28, 2012 were $1,629,022 which is $158,247 and 11% more than the net sales of $1,470,775 for the same quarter last year. This is due to a general increase in demand for the Company's glass.
COST OF SALES
Cost of sales for the quarter ended April 28, 2012 increased $221,680 or 22% to $1,218,354 or 75% of sales, compared to 996,674 or 68% of sales, for the second quarter last year. Cost of sales is comprised of raw materials, manufacturing direct labor and overhead expenses. The overhead portion of cost of sales is primarily comprised of salaries, benefits, building expenses, production supplies, and maintenance costs related to our production, inventory control and quality departments. The increase in costs of sales is directly related to increased sales of our products and the hiring of additional employees in anticipation of a higher level of sales than actually occurred.
GROSS PROFIT
Gross profit for the quarter ended April 28, 2012 decreased $63,433 to $410,668 or 25% of sales from $474,101 or 32% of sales reported for the same quarter last year, primarily because of the decreased operating efficiencies because of expenses incurred in anticipation of higher levels of production.
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OPERATING EXPENSES
Operating expenses decreased $22,530 to $222,531 from $245,061 for the same quarter last year. Operating expenses consist of marketing and business development expenses, professional expenses, salaries and benefits for executive and administrative personnel, hiring, legal, accounting, and other general corporate expenses.
OPERATING INCOME
The Company realized operating income of $188,137 or 12% of sales, for the quarter ended April 28, 2012, compared to an operating income of $229,040 or 16% of sales, for the same quarter last year. This decrease was due to increases in the cost of sales as a percentage of sales, as discussed above.
OTHER INCOME
Other income of $65,238 for the second quarter of fiscal year 2012 increased by $52,262 from $12,976 for the same quarter last year. Other income increased primarily because of higher yields resulting from increases in our new investment portfolio of income securities, which we purchased in the second quarter of Fiscal Year 2011.
PROVISONS FOR INCOME TAX
Income tax expense for the quarter ended April 28, 2012 was $103,900 and 41% of pre tax income compared to $99,200 and 41% of pre tax income for the comparable prior period.
NET INCOME
Net income for the second quarter ended April 28, 2012 increased to $149,475 or $0.19 per share compared to $142,816 or $0.18 per share for second quarter ended April 30, 2011 for the reasons outlined above.
TWENTY-SIX WEEKS ENDED APRIL 28, 2012 COMPARED WITH TWENTY-SIX WEEKS ENDED APRIL 30, 2011
NET SALES
Net sales for the twenty-six weeks ended April 28, 2012 were $3,015,636 which is $281,281 and 9% less than the net sales of $3,296,917 for the same twenty-six week period last year. This is primarily due to the spike in sales during the first quarter of Fiscal Year 2011 related to a non-recurring build up of inventory by one of our major customers in anticipation of a move of its manufacturing operations from Japan to Taiwan.
COST OF SALES
Cost of sales for the twenty-six weeks ended April 28, 2012 was $2,239,235 or 74% of sales, compared to $2,205,194 or 67% of sales, for the same period last year. The increase in cost of sales despite a decrease in sales was primarily due to the high operating efficiencies experienced in the first quarter of Fiscal Year 2011.
GROSS PROFIT
Gross profit for the twenty-six weeks ended April 28, 2012 decreased $315,322 to $776,401 or 26% of sales, from $1,091,723 or 33% of sales reported for the same period last year. The decrease in total gross profit was due to higher sales and higher margins and a better and more efficient use of our facilities and equipment experienced during the first quarter of Fiscal Year 2011.
OPERATING EXPENSES
Operating expenses decreased by $22,234 from $475,611 during the twenty-six week period ended April 30, 2011 to $453,377 during the twenty-six week period ended April 28, 2012.
OPERATING INCOME
The Company realized operating income of $323,024 or 11% of sales, for the twenty-six week period ended April 28, 2012, compared to operating income of $616,112 or 19% of sales, for the same period last year. The reduction in operating income is primarily the result of not being able to replicate the extraordinary and non recurring sales experienced in the first quarter of Fiscal Year 2011, as described above.
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OTHER INCOME
Other income of $170,033 for the twenty-six week period ended April 28, 2012 increased $141,286 from $28,747 for the same period for last year, because of higher yields resulting from our new investment portfolio of income securities, which we initially purchased in the second quarter of Fiscal Year 2011.
INCOME TAX
Income tax expense for the twenty-six week period ended April 28, 2012 was $202,200 and 41% of pre tax income, compared to $264,400 and 41% of total income for the twenty-six week period ended April 30, 2011.
NET INCOME
Net income for the twenty-six week period ended April 28, 2012 decreased 89,602 to $290,857 or $0.38 per share, compared to net income of $380,459 or $0.49 per share for the prior comparable period, primarily because of the decreased sales and operating efficiencies experienced in the first quarter of Fiscal Year 2012 by comparison to the first quarter of the prior year.
FINANCIAL CONDITION
The Company utilizes its working capital to finance current operations and capital improvements. Cash and cash equivalents have decreased $156,878 from $1,751,489 at the end of the fiscal year on October 29, 2011 to $1,594,611 on April 28, 2012 primarily due to purchase of additional securities. Near the end of the second quarter of Fiscal Year 2011, we converted $7,394,000 of our cash bank deposits to an investment account as a means of increasing yield on a significant portion of our liquid assets at a time when interest rates on government insured deposits are at or near historic lows. The investments have been made in a diversified portfolio of income producing securities which is monitored closely to reduce risk of severe market devaluation. These resources continue to be available for facilities expansion and capital improvements, and we will continue to review appropriate use of such funds for future growth and development.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting Company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by Item 3.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Based on an evaluation conducted as of April 28, 2012 by our management, including our Chief Executive Office ("CEO") and Chief Financial Officer ("CFO"), he has concluded that our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") are effective to reasonably ensure that information required to be disclosed in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls. There were no changes in our internal controls during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls over financial reporting.
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OSHA Matter. The proceeding which we described in the Form 10Q for the First Quarter of Fiscal Year 2012 has been settled amicably, with no adverse material impact on the financial position of the Company.
In the ordinary course of business, the Company is from time to time involved in legal proceedings. The Company currently believes that the ultimate outcome of these matters will not have a material adverse impact on the results of operations, liquidity or financial position of the Company.
Smaller reporting companies are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (Removed and Reserved)
The registrant does not have in place procedures by which stockholders may recommend nominees to the registrant's Board of Directors.
(a) EXHIBITS
31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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.
| Opt-Sciences Corporation |
| /s/ Anderson L. McCabe |
| Anderson L. McCabe Chief Executive Officer & Chief Financial Officer June 12, 2012 |
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CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
| I, Anderson L. McCabe, as CEO and CFO of Opt-Sciences Corporation, certify that: | ||
| 1. | I have reviewed this quarterly report of Opt-Sciences Corporation; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Opt-Sciences Corporation as of, and for, the periods presented in this report; | |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for Opt-Sciences Corporation and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to Opt-Sciences Corporation, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of Opt-Sciences Corporation's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in Opt-Sciences Corporation's internal control over financial reporting that occurred during Opt-Sciences Corporation's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Opt-Sciences Corporation's internal control over financial reporting; and | |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to Opt-Sciences Corporation's auditors and the audit committee of Opt-Sciences Corporation's board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Opt-Sciences Corporation's ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in Opt-Sciences Corporation's internal control over financial reporting. | |
| Opt-Sciences Corporation |
| /s/ Anderson L. McCabe |
| Anderson L. McCabe Chief Executive Officer & Chief Financial Officer June 12, 2012 |
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CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
| I, Anderson L. McCabe as CEO and CFO of Opt-Sciences Corporation, certify to my knowledge, pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that: | |
| (1) | The Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 28, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Opt-Sciences Corporation. |
| Opt-Sciences Corporation |
| /s/ Anderson L. McCabe |
| Anderson L. McCabe Chief Executive Officer & Chief Financial Officer June 12, 2012 |
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