SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission File No.
0-2532
FIFTH DIMENSION INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
New Jersey 21-0717490
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
801 New York Avenue, Trenton, New Jersey 08638
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(Address of Principal Executive Office) (Zip Code)
Issuer's Telephone Number, Including Area Code: (609) 393-8350
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of June 30, 1997 the Registrant had outstanding, 1,093,636 shares of
Common Stock $.33 1/3 par value.
FIFTH DIMENSION INC.
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TABLE OF CONTENTS
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PERIOD ENDED JUNE 30, 1997
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PAGE
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PART 1 - FINANCIAL INFORMATION
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Item 1 - Financial Statements
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Balance Sheet ......................................... 1
Statement of Operations and Retained Earnings ......... 2
Statement of Cash Flows ............................... 3
Notes to Financial Statements ......................... 4
Item 2 - Management's Discussion and Analysis of Financial
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Condition and Results of Operations ............................ 5
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FIFTH DIMENSION INC.
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BALANCE SHEET
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(UNAUDITED)
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JUNE 30,
1997
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ASSETS
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CURRENT ASSETS:
Cash ................................................... $106,720
Accounts Receivable - Net .............................. 233,179
Inventories ............................................ 825,319
Prepaid Expenses ....................................... $ 50,081
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Total Current Assets ......................... $1,215,299
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PROPERTY, PLANT AND EQUIPMENT - Net of Accumulated
Depreciation ........................................... $ 575,184
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PATENT COSTS, LESS ACCUMULATED AMORTIZATION ....................... $ 12,183
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DEFERRED INCOME TAXES, BENEFITS ................................... $ 322,660
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TOTAL ASSETS ................................. $2,125,326
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Notes Payable - Current Portion ........................ $ 555,156
Accounts Payable ....................................... 184,713
Accrued Expenses ....................................... 67,174
Accrued Compensation and Vacation ...................... 115,497
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Total Current Liabilities .................... $ 922,540
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LONG TERM LIABILITIES:
Notes payable - Long Term Portion ...................... $ 3,566
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TOTAL LIABILITIES ...................................... 926,106
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STOCKHOLDERS' EQUITY:
Common Stock - ($.33 1/3 Par Value) .................... 364,936
Additional Paid-In Capital ............................. 403,663
Treasury Stock - At Cost................................ ( 604)
Retained Earnings $ 431,225
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TOTAL STOCKHOLDERS' EQUITY.......................... $1,199,220
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.......... $2,125,326
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FIFTH DIMENSION INC.
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STATEMENT OF OPERATIONS AND RETAINED EARNINGS
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(UNAUDITED)
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THREE MONTHS ENDED MARCH 31,
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QUARTER SIX MONTHS QUARTER SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1997 JUNE 30, 1996
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NET SALES $ 388,919 $ 755,405 $1,393,080 $2,728,655
COST OF SALES 566,060 1,175,450 953,384 1,851,657
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GROSS PROFIT (LOSS) ON SALES (177,141) (420,045) 439,696 876,998
OPERATING EXPENSES 207,867 432,157 304,378 614,256
INTEREST EXPENSE 9,170 14,632 2,768 7,539
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OPERATING INCOME (LOSS) (394,178) (866,834) 132,550 255,203
OTHER INCOME (EXPENSE) 36,340 38,889 2,687 6,985
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INCOME (LOSS) BEFORE TAXES (357,838) (827,945) 135,237 262,188
PROVISION FOR INCOME TAXES
(BENEFIT) (139,378) (322,485) 47,731 92,537
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NET INCOME (LOSS) (218,460) (505,460) 87,506 169,651
RETAINED EARNINGS AT
BEGINNING OF PERIOD 649,685 936,685 1,162,996 1,080,851
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RETAINED EARNINGS AT END
OF PERIOD $ 431,225 $ 431,225 $1,250,502 $1,250,502
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NET INCOME (LOSS) PER
COMMON SHARE $ (.20) $ (.46) $ .08 $ .16
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WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING 1,093,636 1,093,636 1,093,636 1,093,636
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FIFTH DIMENSION INC.
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STATEMENT OF CASH FLOWS
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(UNAUDITED)
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SIX MONTHS ENDED JUNE 30,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net Income (Loss) $ (505,460) $ 169,651
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ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET
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CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
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Depreciation Expense 57,900 56,462
(Increase) Decrease in Accounts Receivable (5,975) (86,821)
(Increase) Decrease in Inventory 77,655 170,216
(Increase) Decrease in Prepaid Expenses and Taxes (10,936) (5,731)
Increase (Decrease) in Accounts Payable 49,540 31,153
Increase (Decrease) in Accrued Expenses and Compensation 2,400 5,781
Increase (Decrease) in Accrued/Deferred Income Taxes (322,660) 91,382
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(152,076) 262,442
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Net Cash Provided (Used) by Operating Activities (657,536) 432,093
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CASH FLOWS FROM INVESTING ACTIVITIES
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Capital Expenditures (7,910) (48,398)
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from Loans 492,053 -
Reduction in Notes Payable (16,664) (200,000)
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Net Cash Provided (Used) by Financing Activities 475,389 (200,000)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (190,057) 183,695
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 296,777 141,013
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $106,720 $324,708
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FIFTH DIMENSION INC.
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NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 1997
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NOTE #1 INVENTORIES
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On an interim basis, the cost of goods sold and resulting inventory
valuation is calculated using the gross profit method. A physical inventory
is taken December 31 of each year and a distribution into raw materials,
work in process and finished goods is only available at that time.
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FIFTH DIMENSION INC.
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PERIOD ENDED JUNE 30, 1997
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PART 1 - ITEM 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
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OPERATIONS
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The Registrant reported a net loss of $218,460 and $505,460 for the second
quarter and first half of 1997 on sales revenue of $388,919 and $755,405
respectively. This compares with 1996 net income of $87,506 and $169,651 for the
second quarter and first half on sales revenue of $1,393,080 and $2,728,655 for
the respective periods. This significant decline in operating income and
revenues is a result of production delays and decreasing contract requirements
on the Kearfott slip ring contract. Gross profit was adversely impacted by the
production delays detailed above and low margins on products shipped during the
current periods. Despite significant overhead reductions, the depressed sales
levels and gross profit margins did not provide adequate coverage of
manufacturing overhead. This lack of overhead coverage thus resulted in the
reported gross profit deficits. The Registrant reduced operating expenses by 30%
during the first half of 1997 versus the similar period in 1996. This reduction
was primarily the result of lower personnel costs although various other
overheads were reduced in response to the lower sales and production levels.
Interest costs were higher during the current period as a result of increases in
outstanding debt balances. Income tax benefits were accrued based on the
projected tax reductions anticipated to result in future periods from carryover
of the current operating losses.
The financial condition of the Registrant declined during the first half of 1997
as a result of the operating losses. This is evidenced by the $806,000 decline
in working capital during this time period. The Registrant borrowed
$235,000 during the second quarter and $485,000 over the first half of 1997 from
bank sources and the Registrant's officers and directors. The Registrant's line
of credit was not renewed by its primary bank effective May 1, 1997. The
Registrant is currently past due on the repayment of the line of credit
($400,000) and an installment loan ($66,665) with the same bank. As originally
reported in the Registrant's 10-QSB dated March 31, 1997 and subsequent form 8K
filings, the Registrant is currently pursuing alternative financing in order to
address working capital requirements and the delinquent loan balances. To date,
alternative short term financing of $315,000 has been secured. This includes
$115,000 borrowed from the company directors and officers and $200,000 borrowed
from another bank and guaranteed by a stockholder. The Registrant anticipates
continued financing requirements during 1997 until inventory reductions can
support current cash needs. Additional financing is under review and will be
required in order for the Registrant to meet its cash requirements. In the event
that the Registrant is unsuccessful in its attempt to obtain financing, it could
result in the inability to meet its current financial obligations. Continued
operating deficits are projected for the balance of 1997 although at
significantly lower levels than experienced during the first half. Shipments on
the Kearfott slip ring contract are expected to resume during the third quarter
of 1997 and be completed during the first quarter of 1998. The Registrant
anticipates replacement of the sales from this contract with sales of other
products in its effort to return to profitable operating levels in the future.
The Registrant purchased fixed assets of $7,910 during the first half of 1997
while charging $57,900 against income for depreciation reserves.
No other changes have occurred which would have a material affect on the
liquidity, financial condition or results of operations of the Registrant.
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FIFTH DIMENSION INC.
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SIGNATURES
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In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIFTH DIMENSION INC.
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(Registrant)
Dated: By:
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Craig Ebner
President
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