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 ended July 27, 2013. |
| 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. YESþ NOo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). YESþ NOo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| 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). YESo NOþ
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 September 10, 2013.
Opt-Sciences Corporation
FORM 10-Q THIRD QUARTER REPORT - FISCAL YEAR 2013
TABLE OF CONTENTS
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Opt-Sciences Corporation
CONSOLIDATED BALANCE SHEETS
ASSETS
| July 27, 2013 (Unaudited) | October 27, 2012 | |
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ 4,239,193 | $ 2,834,374 |
| Marketable securities | 6,175,455 | 7,521,011 |
| Trade accounts receivable | 1,199,651 | 1,347,983 |
| Inventories | 842,228 | 652,533 |
| Prepaid expenses | 17,537 | 17,905 |
| Loans and exchanges | 6,625 | 8,942 |
| Accrued interest receivable | 52,247 | 65,115 |
| Total current assets | 12,532,936 | 12,447,863 |
| PROPERTY AND EQUIPMENT | ||
| Land | 114,006 | 114,006 |
| Building and improvements | 668,319 | 578,553 |
| Machinery and equipment | 2,159,316 | 2,152,018 |
| Automobiles | 43,268 | 43,268 |
| Total property and equipment | 2,984,909 | 2,887,845 |
| Less accumulated depreciation | 2,263,800 | 2,153,786 |
| Net property and equipment | 721,109 | 734,059 |
| OTHER ASSETS | ||
| Deposits | 2,837 | 29,621 |
| Total assets | $ 13,256,882 | $ 13,211,543 |
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Opt-Sciences Corporation
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
| July 27, 2013 (Unaudited) | October 27, 2012 | |
| CURRENT LIABILITIES | ||
| Accounts payable - trade | $ 68,419 | $ 77,424 |
| Accrued income taxes | 67,591 | 33,350 |
| Accrued salaries and wages | 179,811 | 213,800 |
| Accrued professional fees | 62,000 | 98,879 |
| Deferred income taxes | 66,362 | 107,151 |
| Other current liabilities | 37,672 | 38,888 |
| Total current liabilities | 481,855 | 569,492 |
| 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 | 12,398,691 | 12,202,801 |
| Accumulated other comprehensive income: | ||
| Unrealized holding gain on marketable securities | 40,859 | 103,773 |
| Less treasury stock at cost - 224,415 shares | (187,218) | (187,218) |
| Total stockholders' equity | 12,775,027 | 12,642,051 |
| Total liabilities and stockholders' equity | $ 13,256,882 | $ 13,211,543 |
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Opt-Sciences Corporation
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
| Three Months Ended July 27, 2013 | Three Months Ended July 28,2012 | Nine Months Ended July 27, 2013 | Nine Months Ended July 28, 2012 | |
| NET SALES | $ 1,572,160 | $ 1,779,154 | $ 4,659,934 | $ 4,794,790 |
| COST OF SALES | 922,827 | 1,111,992 | 2,878,178 | 3,351,227 |
| Gross profit on sales | 649,333 | 667,162 | 1,781,756 | 1,443,563 |
| OPERATING EXPENSES | ||||
| Sales & delivery | 5,793 | 3,809 | 35,280 | 13,816 |
| General & administrative | 265,828 | 244,994 | 793,179 | 688,364 |
| Total operating expenses | 271,621 | 248,803 | 828,459 | 702,180 |
| Operating income | 377,712 | 418,359 | 953,297 | 741,383 |
| OTHER INCOME | 9,565 | 91,616 | 233,223 | 261,649 |
| Income before taxes | 387,277 | 509,975 | 1,186,520 | 1,003,032 |
| FEDERAL AND STATE INCOME TAXES | 166,800 | 209,000 | 486,500 | 411,200 |
| Net income | 220,477 | 300,975 | 700,020 | 591,832 |
| OTHER COMPREHENSIVE INCOME | ||||
| Unrealized holding (losses) gains on | ||||
| marketable securities, net of taxes | (145,232) | 64,369 | 40,859 | 89,139 |
| Comprehensive income | $ 75,245 | $ 365,344 | $ 740,879 | $ 680,971 |
| EARNINGS PER SHARE OF | ||||
| COMMON STOCK | $ 0.28 | $ 0.39 | $ 0.90 | $ 0.76 |
| Average shares of stock outstanding | 775,585 | 775,585 | 775,585 | 775,585 |
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (Unaudited)
| Three Months Ended July 27, 2013 | Three Months Ended July 28, 2012 | Nine Months Ended July 27, 2013 | Nine Months Ended July 28, 2012 | |
| RETAINED EARNINGS - beginning of period | 12,178,214 | 11,555,019 | 12,202,801 | 11,264,162 |
| Net income | 220,477 | 300,975 | 700,020 | 591,832 |
| 12,398,691 | 11,855,994 | 12,902,821 | 11,855,994 | |
| Less: Dividends paid | -0- | -0- | 504,130 | -0- |
| RETAINED EARNINGS - end of period | $ 12,398,691 | $ 11,855,994 | $ 12,398,691 | $ 11,855,994 |
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Opt-Sciences Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Nine Months Ended July 27, 2013 | Nine Months Ended July 28, 2012 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $ 700,020 | $ 591,832 |
| Adjustments to reconcile net income to net | ||
| cash provided by operating activities: | ||
| Depreciation | 110,014 | 106,822 |
| Loss on sales of securities | 61,830 | 51,250 |
| Decrease (increase) in: | ||
| Accounts receivable | 148,332 | (508,865) |
| Inventories | (189,695) | (108,090) |
| Prepaid expenses | 368 | 15,222 |
| Loans and exchanges | 2,317 | 4,045 |
| Accrued interest receivable | 12,868 | 8,196 |
| Deposits | 26,784 | -0- |
| (Decrease) increase in: | ||
| Accounts payable | (9,005) | 33,941 |
| Accrued income taxes | 34,241 | (151,028) |
| Accrued salaries and wages | (33,989) | (18,948) |
| Accrued professional fees | (36,879) | (18,058) |
| Other current liabilities | (1,216) | 1,164 |
| Net cash provided by operating activities | 825,990 | 7,483 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of fixed assets | (97,064) | (13,197) |
| Purchases of securities | (3,016,510) | (583,366) |
| Proceeds from sales of securities | 4,196,533 | 630,413 |
| Net cash provided by investing activities | 1,082,959 | 33,850 |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Dividends paid | (504,130) | -0- |
| Increase in cash | 1,404,819 | 41,333 |
| Cash and cash equivalents at beginning of period | 2,834,374 | 1,751,489 |
| Cash and cash equivalents at end of period | $ 4,239,193 | $ 1,792,822 |
| SUPPLEMENTAL DISCLOSURES: | ||
| Income taxes paid | $ 402,259 | $ 562,528 |
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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 and S Research, Inc. (collectively, the "Company"). 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 nine months of the Company's fiscal year 2013. 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 27, 2012 together with the auditors' report filed as part of the Company's 2012 Annual Report on Form 10-K.
The three and nine months that ended July 27, 2013 represent thirteen and thirty-nine weeks respectively. The three and nine months that ended July 28, 2012 represent thirteen and thirty-nine weeks respectively.
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:
| July 27, 2013 (Unaudited) | October 27, 2012 | ||
| Raw materials and supplies | $ 303,916 | $ 340,694 | |
| Work in progress | 300,046 | 127,260 | |
| Finished goods | 238,266 | 184,579 | |
| Total Inventory | $ 842,228 | $ 652,533 |
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 shipping terms are customarily FOB shipping point.
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4. FINANCIAL INSTRUMENTS
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. 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.
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 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 guidance related to measuring and disclosing fair values. The Company's adoption of the updated guidance effective October 28, 2012 did not have any impact on the Company's results of operations, financial position or liquidity.
In June 2011, the FASB amended the presentation of comprehensive income. The amendments in this update give us the option to present the total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We adopted this amendment on October 28, 2012 and elected to present other comprehensive income in a single continuous statement, Consolidated Statements of Income and Comprehensive Income.
In December 2011, the provisions of Accounting Standards Codification (ASC) Topic 210, "Balance Sheet", were amended to require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of these arrangements on its financial position. In January 2013, the provisions of ASC Topic 210 were further amended to clarify that the scope of the previous amendment only applies to derivative instruments, including separated bifurcated derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either eligible for offset in the balance sheet or are subject to an agreement similar to a master netting agreement. The guidance requires entities to disclose both gross information and net information about assets and liabilities within the scope of the amendment. These provisions are effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance effective January 27, 2013 did not affect our financial position or results of operations.
In February 2013, the provisions of ASC Topic 220, "Comprehensive Income", were amended to require an entity to disclose information about the amounts reclassified out of accumulated other comprehensive income by component. For amounts required to be reclassified out of accumulated other comprehensive income in their entirety in the same reporting period, the guidance requires entities to present significant amounts by the respective line items of net income, either on the face of the income statement or in the notes to the financial statements. For other amounts that are not required to be reclassified to net income in their entirety, a cross-reference is required to other disclosures that provide additional details about those amounts. These provisions are effective for annual reporting periods beginning after December 15, 2012. We do not anticipate that the adoption of this guidance will have a material impact on our financial position or results of operations.
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6. SUBSEQUENT EVENTS
The Company acquired the adjacent premises at 1900 Bannard Street, Cinnaminson, New Jersey on July 31, 2013 pursuant to an earlier reported Agreement of Sale for $367,500. After completing required renovations over the course of the next twelve months, the Company plans to use the premises for storage, manufacturing and office space. The Company is not aware of any other 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 2012 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 and 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 third quarter sales of $1,572,160 and net income of $220,477. Sales decreased approximately 9% or $155,003 from the second quarter of Fiscal Year 2013. Compared to the third quarter of 2012, sales decreased approximately 12% or $206,994. We currently expect fourth quarter sales to be approximately $1,500,000 or slightly lower than the third quarter.International financial concerns combined with political unrest in the Middle East(resulting in higher oil prices) and the prospect of higher interest rates may adversely affect aircraft users and purchasers by inhibiting their ability to finance and their desire to purchase new airplanes as well as their ability and desire to upgrade existing aircraft. During the third quarter of 2013, the Company booked $1,654,000 in new orders compared to $1,706,000 in new orders booked for the second quarter of 2013 and $1,197,000 in new orders booked in the third quarter of 2012. Our backlog of unshipped orders was approximately $2,172,000 at the end of the third quarter, up approximately $90,000 from the end of the second quarter of 2013 and down $366,000 from the third quarter of 2012. The higher backlog at the end of the same period last year was primarily due to an inventory buildup by one of our major customers causing a temporary spike in demand.
Even though we have a significant backlog, approximately half the backlog is scheduled for delivery in Fiscal Year 2014. Based on their 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 manufacture and ship our products. Since the Company has two customers that together represented over 46% of sales this quarter, any significant change in the requirements of either of those customers has a direct impact on our revenue for a quarter.
RESULTS OF OPERATIONS - THIRD QUARTER
THREE MONTHS ENDED JULY 27, 2013 COMPARED WITH THREE MONTHS ENDED JULY 28, 2012
NET SALES
Net sales for the third quarter were $1,572,160 which is $206,994 and about 12% less than the net sales of $1,779,154 for the same quarter last year.
COST OF SALES
Cost of sales for the third quarter decreased $189,165 or 17% to $922,827 or 59% of sales, compared to $1,111,992 or 63% of sales, for the third quarter last year. The decrease in cost of sales was primarily due to the lower sales of approximately $68,000 during the third quarter and due to lower material costs and lower direct labor costs of approximately $121,000. 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.
GROSS PROFIT
Gross profit for the third quarter decreased $17,829 to $649,333 or 41% of sales from $667,162 or 37% of sales reported for the same quarter last year.
OPERATING EXPENSES
Operating expenses increased $22,818 to $271,621 from $248,803 for the same quarter last year. This increase was primarily due to an increase in travel and legal expenses. 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.
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OPERATING INCOME
The Company realized operating income of $377,712 or 24% of sales for the third quarter compared to an operating income of $418,359 or 24% of sales, for the same quarter last year.
OTHER INCOME
Other income of $9,565 for the third quarter decreased by $82,051 from the same quarter last year. This decrease was primarily related to the recognition of realized losses from the company's securities' portfolio. During this quarter, the Company made certain adjustments to its portfolio of income securities in an attempt to minimize the anticipated effect of prospective policy changes of the Federal Reserve Bank leading to higher interest rates.
PROVISONS FOR INCOME TAX
Income tax expense for the third quarter was $166,800 or 43% of pre tax income compared to $209,000 and 41% of pre tax income for the comparable prior period.
NET INCOME
There was net income for the third quarter of $220,477 or $0.28 per share compared to $300,975 or $0.39 per share for third quarter of Fiscal 2012.
NINE MONTHS ENDED JULY 27, 2013 COMPARED WITH NINE MONTHS ENDED JULY 28, 2012
NET SALES
Net sales for the nine months ended July 27, 2013 were $4,659,934 which is $134,856 and about 3% less than the net sales of $4,794,790 for the same nine month period last year.
COST OF SALES
Cost of sales for the nine months ended July 27, 2013 was $2,878,178 or 62% of sales, compared to $3,351,227 or 70% of sales, for the same period last year. The larger decrease in cost of sales despite a small decrease in sales was primarily due to the higher operating efficiencies experienced during the third quarter resulting in lower material costs and lower direct labor costs. 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.
GROSS PROFIT
Gross profit for the nine months ended July 27, 2013 increased $338,193 to $1,781,756 or 38% of sales, from $1,443,563 or 30% of sales reported for the same period last year. The increase in total gross profit was due to higher operating efficiencies and margins than for the same period last year.
OPERATING EXPENSES
Operating expenses increased by $126,279 to $828,459 during the nine month period ended July 27, 2013 from $702,180 during the same nine month period last year. This was due primarily to higher travel expenses and higher legal expenses. 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 $953,297 or 20% of sales, for the nine month period ended July 27, 2013, compared to operating income of $741,383 or 15% of sales, for the same period last year. The increase in operating income is primarily due to higher operating efficiencies.
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OTHER INCOME
Other income of $233,223 for the nine month period ended July 27, 2013 decreased $28,426 from $261,649 for the same period for last year. This difference was primarily related to the recognition of unrealized losses from the company's securities' portfolio.
INCOME TAX
Income tax expense for the nine month period ended July 27, 2013 was $486,500 and 41% of pre tax income, compared to $411,200 and 41% of pre tax income for the nine month period ended July 28, 2012.
NET INCOME
Net income for the nine month period ended July 27, 2013 increased $108,189 to $700,020 or $0.90 per share, compared to net income of $591,832 or $0.76 per share for the prior comparable period, primarily because of the increased operating efficiencies over those experienced in the prior year.
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 which is conducted quarterly by our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as of July 27, 2013 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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We are subject from time to time to certain claims and litigation in the ordinary course of business. It is the opinion of management that the outcome of such matters will not have a material adverse impact on our combined financial position or results of operations.
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. MINE SAFETY DISCLOSURES
Not applicable.
The registrant does not have in place procedures by which stockholders may recommend nominees to the registrant's Board of Directors.
| 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. | |
| 101. | Financial statements from the Quarterly Report of Form 10-Q of Opt-Sciences Corporation for the period ending July 27, 2013 as interactive data files formatted in XBRL: (i) The Consolidated Balance Sheet, (ii) the Consolidated Statement of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements. | |
| 101.INS | XBRL Instance Document. | |
| 101.SCH | XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
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 September 10, 2013 |
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