-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TjI2k5qDHq81CtBC6pCtkpSunr8N5a3sk4QEpCfWvWIH3ceQSNW5zYYTlrurg38S 8oElehRqh6oCInBFhLFGvA== 0000912057-96-016772.txt : 19960812 0000912057-96-016772.hdr.sgml : 19960812 ACCESSION NUMBER: 0000912057-96-016772 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMAGE SENSING SYSTEMS INC CENTRAL INDEX KEY: 0000943034 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 411519168 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26056 FILM NUMBER: 96606589 BUSINESS ADDRESS: STREET 1: 500 SPRUCE TREE CENTRE STREET 2: 1600 UNIVERSITY AVE CITY: ST PAUL STATE: MN ZIP: 55104-3825 BUSINESS PHONE: 6126429904 MAIL ADDRESS: STREET 1: 500 SPRUCE TREE CENTRE STREET 2: 1600 UNIVERSITY AVE W. CITY: ST PAUK STATE: MN ZIP: 55104 10QSB 1 10QSB - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - ------------------------------------------------------------------------------- FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1996 Commission File Number 0-26056 - ---------------------------------- ------------------------------ IMAGE SENSING SYSTEMS, INC. (Exact name of registrant as specified in its charter) Minnesota 41-1519168 - ------------------------------ ---------------------------------- State of other jurisdiction of I.R.S. Employer Identification No. incorporation organization 500 SPRUCE TREE CENTRE 1600 UNIVERSITY AVE. W. ST. PAUL, MN 55104-3825 (Address of principal executive offices) Registrant's telephone number, including area code: (612) 603-7700 ---------------------------------------- Not applicable - ------------------------------------------------------------------------------- (Former name, former address, and former 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 No ------- ------ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $.01 Par Value -- 2,475,000 shares as of August 1, 1996. ---------------------------------------------------------------------- - ------------------------------------------------------------------------------- IMAGE SENSING SYSTEMS, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. -------- Item 1. Condensed Financial Statements: Condensed Balance Sheets June 30, 1996 and December 31, 1995 3 Condensed Statements of Operations Three and six month periods ended June 30, 1996 and 1995 4 Condensed Statements of Cash Flows Six-month periods ended June 30, 1996 and 1995 5 Notes to Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 7 PART II. OTHER INFORMATION Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements IMAGE SENSING SYSTEMS, INC. CONDENSED BALANCE SHEET
June 30, December 31, 1996 1995 ----------------- -------------- ASSETS (Unaudited) (Note) Current assets: Cash and cash equivalents $ 1,400,000 $ 2,564,000 Accounts receivable 1,136,000 865,000 Refundable & deferred income tax 209,000 213,000 Inventories 85,000 95,000 Prepaid expenses 65,000 74,000 ----------------- -------------- Total current assets 2,895,000 3,811,000 Property and equipment 622,000 636,000 ----------------- -------------- Total Assets $ 3,517,000 $ 4,447,000 ----------------- -------------- ----------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes and accounts payable $ 357,000 $ 494,000 Accrued expenses 326,000 182,000 Deferred compensation - 62,000 ----------------- -------------- Total current liabilites 683,000 738,000 Deferred income tax liability 31,000 31,000 Shareholders' equity: Common stock 25,000 25,000 Additional paid-in capital 3,875,000 3,875,000 Retained earnings (deficit) (1,097,000) (222,000) ----------------- -------------- 2,803,000 3,678,000 ----------------- -------------- Total liabilities and shareholders' equity $ 3,517,000 $ 4,447,000 ----------------- -------------- ----------------- --------------
Note: The balance sheet at December 31, 1995 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accounting principles for complete financial statements. See accompanying notes 3 IMAGE SENSING SYSTEMS, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Month Period Ended Six Month Period Ended June 30 June 30 ------------------------ -------------------------- 1996 1995 1996 1995 ------------------------ -------------------------- REVENUE: Product sales $ 131,000 $ 136,000 $ 205,000 $ 233,000 Royalties and commissions 517,000 636,000 937,000 823,000 Consulting and contract fees 204,000 3,000 340,000 32,000 ------------------------ -------------------------- 852,000 775,000 1,482,000 1,088,000 COSTS OF REVENUE: Product sales 78,000 49,000 107,000 94,000 Royalties and commissions 59,000 117,000 105,000 155,000 Consulting and contract fees 151,000 (8,000) 244,000 35,000 ------------------------ -------------------------- 288,000 158,000 456,000 284,000 ------------------------ -------------------------- Gross profit 564,000 617,000 1,026,000 804,000 OPERATING EXPENSES: Selling, general and administrative 648,000 435,000 1,416,000 708,000 Research and development 236,000 98,000 555,000 182,000 ------------------------ -------------------------- 884,000 533,000 1,971,000 890,000 ------------------------ -------------------------- Income (loss) from operations (320,000) 84,000 (945,000) (86,000) Other income, net 22,000 22,000 52,000 20,000 ------------------------ -------------------------- Income (loss) before income taxes (298,000) 106,000 (893,000) (66,000) Income taxes (benefit) - 30,000 (18,000) (18,000) ------------------------ -------------------------- Net income (loss) $ (298,000) $ 76,000 $ (875,000) $ (48,000) ------------------------ -------------------------- ------------------------ -------------------------- Net income (loss) per common share $ (0.12) $ 0.04 $ (0.35) $ (0.03) ------------------------ -------------------------- ------------------------ -------------------------- Weighted average number of shares and common share equivalents outstanding 2,475,000 2,020,000 2,475,000 1,747,000 ------------------------ -------------------------- ------------------------ --------------------------
See accompanying notes 4 IMAGE SENSING SYSTEMS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Month Period Ended June 30 ------------------------------------ 1996 1995 ------------------------------------ OPERATING ACTIVITIES: Net loss $ (875,000) $ (48,000) Adjustments to reconcile net loss to net cash used in operating activities (224,000) (214,000) ------------------------------------ Net cash used in operating activities (1,099,000) (262,000) INVESTING ACTIVITIES: Purchase of property and equipment (65,000) (127,000) Purchase of short-term investments - (1,100,000) ------------------------------------ Net cash used in investing activities (65,000) (1,227,000) FINANCING ACTIVITIES: Sale of 990,000 shares common stock, net of cost of offering - 3,858,000 Payment of note payable, bank - (40,000) ------------------------------------ Net cash provided by financing activities - 3,818,000 ------------------------------------ Increase (decrease) in cash and cash equivalents (1,164,000) 2,329,000 Cash and cash equivalents, beginning of period 2,564,000 13,000 ------------------------------------ Cash and cash equivalents, end of period $ 1,400,000 $ 2,342,000 ------------------------------------ ------------------------------------
See accompanying notes 5 IMAGE SENSING SYSTEMS, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) June 30, 1996 NOTE A: BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto for the year ended December 31, 1995. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Three and Six Month Periods Ended June 30, 1996) Revenues for the second quarter of 1996 were $852,000, up 10% from $775,000 for the same period a year ago while revenues for the first half of 1996 were $1,482,000, up 36% from $1,088,000 a year ago. The increase in second quarter revenues was due primarily to new contract development grants received in the last half of 1995 which continued into 1996, offset in part by reduced royalty and commission income. Revenues for the first half of 1996 were more than 1995 primarily due to increased development grants and royalty and commission income. Gross profits were $564,000 in the second quarter of 1996, or 66% of revenue, compared to $617,000, or 80% of revenue, for the same period a year ago. Gross profits for the first half of 1996 were $1,026,000, or 69% of revenue, compared to $804,000, or 74% of revenue, for the same period a year ago. The reduced margins in 1996 are due primarily to proportionately more revenue from contract development grants, which have lower gross profit margins than royalties and commissions or direct sales. Selling, general and administrative expenses were $648,000 and $1,416,000, respectively, for the three and six month periods ended June 30, 1996 compared to $435,000 and $708,000 for the same periods a year ago. The increases were due primarily from adding sales and marketing personnel to help expand the business, technical personnel to provide additional customer support, and administrative personnel to support the growth of the business. Personnel were added primarily in the second half of 1995. Research and development expenses were $236,000 and $555,000, respectively, for the three and six month periods ended June 30, 1996 compared to $98,000 and $182,000 for the same periods a year ago. The increases were due primarily from adding technical 7 personnel in the second half of 1995 to increase product development of the AutoscopeTM System. Other income, net was $22,000 and $52,000, respectively, for the three and six month periods ended June 30, 1996 compared to $22,000 and $20,000, respectively, for the same periods a year ago. The increases resulted primarily from increased interest income from investments made with proceeds remaining from the initial public offering. The Company expects its effective income tax benefit rate to be less than 2% for 1996. The Company's effective income tax rate was approximately 28% for the three and six month periods ended June 30, 1995. LIQUIDITY AND CAPITAL RESOURCES: The Company completed an initial public offering in June 1995 with the sale of 990,000 shares of common stock, receiving net proceeds of approximately $3.9 million. The proceeds are being used for the expansion of the business and the unused portion is currently held in interest-bearing cash equivalents. Cash used in operations was $1,099,000 for the six-month period ended June 30, 1996, compared to $262,000 for the same period in 1995. The decrease in cash flow from operations was primarily due to a net loss for the first half of 1996 of $875,000 compared to $48,000 for the first half of 1995, along with increased investments in inventory, accounts receivable, and prepaid expenses related to expansion of the business. Capital expenditures were $65,000 for the six-month period ended June 30, 1996, compared to $127,000 for the same period in the prior year. The Company expects to continue to make reduced investments in technical and office equipment for the balance of 1996. 8 Management believes that its cash and investment position, anticipated cash flows from operations, and funds available through its bank line of credit will be sufficient to meet working capital requirements for current operations and planned new product introductions for the foreseeable future. 9 PART II: OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Not applicable Item 2. CHANGES IN SECURITIES Not applicable Item 3. DEFAULTS UPON SENIOR SECURITIES Not applicable Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual meeting on May 15, 1996, in Minneapolis, Minnesota. The Company solicited proxies and filed its definitive proxy statement with the Commission pursuant to Regulation 14A. The only matter voted upon at the meeting was the election of directors as follows: DIRECTOR FOR WITHHOLD AUTHORITY -------- --- ------------------ Panos G. Michalopoulos 2,219,374 32,045 Spiro G. Voglis 2,246,474 4,945 Richard C. Magnuson 2,246,474 4,945 Richard P. Braun 2,246,474 4,945 James Murdakes 2,246,474 4,945 Item 5. OTHER INFORMATION Not applicable Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS None (b) REPORTS No reports on Form 8-K were filed during the quarter covered by this Form 10-QSB 10 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. Image Sensing Systems, Inc. -------------------------------------- (Registrant) Dated: August 8, 1996 /s/ SPIRO G. VOGLIS -------------------------------------- Spiro G. Voglis President and Chief Executive Officer (principal executive officer) Dated: August 8, 1996 /s/ ARTHUR J. BOURGEOIS ----------------------------------------- Arthur J. Bourgeois Chief Financial Officer (principal financial and accounting officer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEETS AT JUNE 30, 1996 AND DECEMBER 31, 1995 AND STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1996 JUN-30-1996 1,400,000 0 1,331,000 43,000 84,000 2,895,000 868,000 246,000 3,517,000 683,000 0 0 0 25,000 2,778,000 3,517,000 205,000 1,482,000 107,000 2,427,000 0 0 0 (893,000) (18,000) (875,000) 0 0 0 (875,000) (.35) (.35)
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