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Second Quarter And Six Months 2014 Financial Results Released By Inrad Optics, Inc.

Companies mentioned in this article: Inrad Optics, Inc.

NORTHVALE, N.J., Aug. 20, 2014 /PRNewswire/ -- Inrad Optics, Inc. (OTCBB: INRD) has reported its consolidated financial results for its second quarter and six months ended June 30, 2014.

Revenue for the second quarter was $2.2 million, down 17.3% from $2.7 million in the same period last year. For the six months ended June 30, 2014, revenue was $4.1 million compared to $5.8 million for the comparable period last year as the Company experienced a decrease in shipments in the defense and university & national labs markets. Increased shipments in laser systems and process control & metrology markets partially offset the overall decline. Sales to the Company's top five customers represented approximately 47% of sales in six months ended June 30, 2014, compared to 35% last year.

Orders were $5.4 million and $4.8 million for the six months ended June 30, 2014 and 2013, respectively, an increase of 12.5%.

Gross profit for the second quarter of 2014 was $(141,000) including restructuring costs of $62,000, or (6.3%) of sales, versus $308,000 or 11.4% in the comparable quarter last year. For the six months ended June 30, 2014, gross profit decreased to $(277,000) including $121,000 of restructuring costs, or (6.7%) of sales compared to $1.0 million or 17.4% in 2013. The 2014 decrease in gross profit margin primarily reflects a lower and less profitable sales mix compared to 2013. The six months ended June 30, 2013 was favorably impacted by payroll savings of approximately $79,000, net of severance and other separation costs, related to a reduction in work-force.

The Company had a net loss of $(1,031,000) and $(1,906,000) for the three and six months ended June 30, 2014. This compares with a net loss of $(648,000) and $(817,000) in the comparable periods last year. Net loss per share was $(0.08) and $(0.16), basic and diluted, for the three months and six months ended June 30, 2014. For the three and six months ended June 30, 2013, the basic and diluted net loss per share was $(0.05) and $(0.07), respectively.

Net cash used in operating activities was $1,121,000 for the six months ended June 30, 2014 compared to net cash used of $134,000 last year. The difference primarily reflects the impact of the higher net loss in the six months ended June 30, 2014.

Investing activities in the six months ended June 30, 2014 include capital expenditures of $363,000 primarily related to the consolidation of the Florida operation in Northvale, NJ, net of proceeds from the sale of plant and equipment of $78,000. This compared with capital expenditures of $447,000 in the same period last year related mainly to the purchase of a plasma assist optical coating chamber and related expenditures for additional equipment and installation.

After investing and financing activities, net cash decreased by $1,492,000 versus a decrease of $624,000 last year. At June 30, 2014, the Company had cash and cash equivalents of $960,000.

President and CEO Amy Eskilson remarked "Our Q2 results, while unfavorable, represent a predicted function of our one-time consolidation costs and reduced shipments to our defense and university segment customers. Much more positively, I am pleased to report orders are up 15% in 2014 over the same period in 2013, resulting in a backlog that is up over $1.2 million or 28% from the start of the year. We continue to be successful at diversifying our customer base, represented by new orders in the medical, commercial sensing and inspection markets. Operationally, facility integration efforts are paying off and cost savings are being realized.

Additionally, the development and commercialization of the nuclear detection crystal stilbene continues to demonstrate success. In June, we were honored with two significant awards - a coveted SBIR Tibbetts Award from the Small Business Association, and an award from the US Department of Homeland Security's Domestic Nuclear Detection Office."

Inrad Optics, Inc. was incorporated in New Jersey in 1973. The Company develops, manufactures and markets products and services for use in photonics industry sectors via three distinct but complimentary product areas - "Crystals and Devices", "Custom Optics" and "Metal Optics."

The Company is a vertically integrated organization specializing in crystal-based optical components and devices, custom optical components from both glass and metal, and precision optical and opto-mechanical assemblies. Manufacturing capabilities include solution and high temperature crystal growth, extensive optical fabrication capabilities, including precision diamond turning and the ability to handle large substrates, optical coatings and in-process metrology expertise. Inrad Optics' customers include leading corporations in the defense, aerospace, laser systems, process control and metrology sectors of the photonics industry, as well as the U.S. Government, National Laboratories and Universities worldwide.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These statements may be identified by their use of forward-looking terminology such as "believes", "expects", "should", "will", "plan", "anticipate", "probably", "targeting" or similar words. Such forward-looking statements, such as our expectation for revenues, new orders, and improved results involve risks and uncertainties that could cause actual results to differ materially from those projected. Risks and uncertainties that could cause actual results to differ materially from such forward looking statements are, but are not limited to, uncertainties in market demand for the company's products or the products of its customers, future actions by competitors, inability to deliver product on time, inability to develop new business, inability to retain key employees or hire new employees, and other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission including our Annual Report on Form 10-K for the year ended December 31, 2013. The forward looking statements made in this news release are made as of the date hereof and Inrad Optics, Inc. does not assume any obligation to update publicly any forward looking statement.

                                                                                              INRAD OPTICS, INC AND SUBSIDIARIES

                                                                                            CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                                                                                    June 30,              December 31,

                                                                                                                                          2014                     2013
                                                                                                                                          ----                     ----

                                                                                                                                  (Unaudited)               (Audited)


    Assets
    ------

    Current assets:

    Cash and cash equivalents                                                                                                                    $959,636               $2,451,263

    Accounts receivable (net of allowance for doubtful accounts of $15,000 in 2014 and 2013)                                         1,121,043                1,236,958

    Inventories, net                                                                                                                 2,917,718                3,129,855

    Other current assets                                                                                                               103,409                  144,581
                                                                                                                                       -------                  -------

    Total current assets                                                                                                             5,101,806                6,962,657
                                                                                                                                     ---------                ---------



    Plant and equipment:

    Plant and equipment,  at cost                                                                                                   15,674,367               15,638,759

    Less: Accumulated depreciation and amortization                                                                               (13,874,280)             (13,931,775)
                                                                                                                                   -----------              -----------

        Total plant and equipment                                                                                                    1,800,087                1,706,984
                                                                                                                                     ---------                ---------

                                                                                                                                       483,676                  474,960

    Precious Metals

    Goodwill                                                                                                                           311,572                  311,572

    Intangible Assets, net                                                                                                             319,479                  358,760

    Other Assets                                                                                                                        33,122                   33,122
                                                                                                                                        ------                   ------

                                                                                                                                               $8,049,742               $9,848,055



    Total Assets



    Liabilities and Shareholders' Equity
    ------------------------------------

    Current Liabilities:

    Current portion of other long term notes                                                                                                     $156,600                 $156,600

    Accounts payable and accrued liabilities                                                                                           919,537                  967,963

    Customer advances                                                                                                                  251,370                  146,784

    Total current liabilities                                                                                                        1,327,507                1,271,347
                                                                                                                                     ---------                ---------


    Related Party Convertible Notes Payable                                                                                          2,500,000                2,500,000


    Other Long Term Notes, net of current portion                                                                                      635,339                  712,868
                                                                                                                                       -------                  -------

    Total liabilities                                                                                                                4,462,846                4,484,215
                                                                                                                                     ---------                ---------


    Commitments


    Shareholders' Equity:

    Common stock: $.01 par value; 60,000,000 authorized shares;                                                                        123,543                  120,508
         12,354,093 shares issued at June 30, 2014 and 12,050,603
         issued at December 31, 2013

    Capital in excess of par value                                                                                                  18,419,966               18,293,782

    Accumulated deficit                                                                                                           (14,941,663)             (13,035,500)
                                                                                                                                   -----------              -----------

                                                                                                                                     3,601,846                5,378,790

    Less - Common stock in treasury, at cost (4,600 shares)                                                                           (14,950)                (14,950)
                                                                                                                                       -------                  -------

    Total shareholders' equity                                                                                                       3,586,896                5,363,840
                                                                                                                                     ---------                ---------

                                                                                                                                               $8,049,742               $9,848,055



    Total Liabilities and Shareholders' Equity

                                                                INRAD OPTICS, INC AND SUBSIDIARIES
                                                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                            (Unaudited)


                                                                                                                 Three Months Ended June 30,                    Six Months Ended June 30,
                                                                                                                                                              -------------------------

                                                                                                                   2014                         2013               2014                       2013
                                                                                                                   ----                         ----               ----                       ----


                 Total revenue                                                                                             $2,227,546                      $2,694,598                                $4,131,926       $5,771,724


                 Cost and expenses:

                 Cost of goods sold                                                                          2,307,000                    2,386,866          4,288,678                  4,764,894

                 Restructuring costs                                                                            61,951                            -           120,616                          -

                 Selling, general and administrative expenses                                                  844,581                      909,664          1,603,686                  1,763,472


                                                                                                           3,213,532                    3,296,530          6,012,980                  6,528,366
                                                                                                           ---------                    ---------          ---------                  ---------


                 Loss from operations                                                                        (985,986)                   (601,932)       (1,881,054)                   (756,642


                 Other expense:

                 Interest expense-net                                                                         (45,308)                    (45,832)          (90,183)                   (91,476

                 Gain on sale of plant and equipment                                                                 -                           -            65,074                     31,000


                                                                                                            (45,308)                    (45,832)          (25,109)                   (60,476
                                                                                                             -------                      -------            -------                    -------


                 Net loss before income taxes                                                              (1,031,294)                    (647,764)       (1,906,163)                   (817,118


                 Income tax (provision) benefit                                                                      -                           -                 -                         -


                 Net loss                                                                                                $(1,031,294)                     $(647,764)                             $(1,906,163)       $(817,118




    Net loss per common share-                                                                                              $(0.08)                         (0.05)                                  $(0.16)          (0.07)

         basic and diluted                                                                                                                             $                                                          $
                                                                                                                                                     ===                                                        ===


    Weighted average shares outstanding-                                                                  12,349,490                   12,046,003                      12,133,666                   11,926,328

           basic and diluted


                                                            INRAD OPTICS, INC AND SUBSIDIARIES

                                                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                        (Unaudited)




                                                                                                                 Six Months Ended

                                                                                                                    June 30,
                                                                                                                    --------

                                                                                                             2014                       2013
                                                                                                             ----                       ----


    Cash flows from operating activities:

    Net (loss)                                                                                                      $(1,906,163)             $(817,118)
                                                                                                                     -----------               ---------


    Adjustments to reconcile net (loss) to net cash

      (used in) operating activities:

    Depreciation and amortization                                                                         295,721                    259,094

    401K common stock contribution                                                                         71,255                     80,922

    (Gain) on sale of plant and equipment                                                                (65,074)                  (31,000)

    Stock based compensation                                                                               57,964                     80,284

    Changes in operating assets and liabilities:

           Accounts receivable                                                                            115,915                    185,660

            Inventories, net                                                                              212,137                    200,393

            Other current assets                                                                           41,172                     46,797

            Accounts payable and accrued liabilities                                                     (48,427)                  (26,180)

            Customer advances                                                                             104,586                 (112,512­)
                                                                                                          -------                  ---------

    Total adjustments and changes                                                                         785,249                    683,458
                                                                                                          -------                    -------

    Net cash (used in) operating activities                                                           (1,120,914)                  (133,660)
                                                                                                       ----------                   --------


    Cash flows from investing activities:

    Capital expenditures                                                                                (362,848)                 (447,039)

    Purchase of precious metal tools                                                                      (8,716)                         -

    Proceeds from sale of plant and equipment                                                              78,380                     31,000
                                                                                                           ------                     ------

    Net cash (used in) investing activities                                                             (293,184)                 (416,039)
                                                                                                         --------                   --------


    Cash flows from financing activities:

    Principal payments on notes payable-other                                                            (77,529)                  (74,169)
                                                                                                          -------                    -------

    Net cash (used in)  financing activities                                                             (77,529)                  (74,169)
                                                                                                          -------                    -------


    Net (decrease) in cash and cash equivalents                                                       (1,491,627)                  (623,868)


    Cash and cash equivalents at beginning of period                                                    2,451,263                  3,089,013


    Cash and cash equivalents at end of period                                                                          $959,636              $2,465,145
                                                                                                                        ========              ==========


    Supplemental Disclosure of Cash Flow Information:

             Interest paid                                                                                               $55,000                 $59,000
                                                                                                                         =======                 =======

             Income taxes paid                                                                                            $2,000                  $2,000
                                                                                                                          ======                  ======

SOURCE Inrad Optics, Inc.