SCI ENGINEERED MATERIALS, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, SEPT. 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
PRODUCT REVENUE $ 2,191,843 $ 2,028,355 $ 6,548,847 $ 4,738,869
CONTRACT RESEARCH
REVENUE 241,538 196,401 686,311 697,475
----------- ----------- ----------- -----------
2,433,381 2,224,756 7,235,158 5,436,344
----------- ----------- ----------- -----------
COST OF PRODUCT REVENUE 1,746,844 1,481,956 4,871,252 3,651,003
COST OF CONTRACT
RESEARCH 170,592 190,501 504,111 556,532
----------- ----------- ----------- -----------
1,917,436 1,672,457 5,375,363 4,207,535
----------- ----------- ----------- -----------
GROSS PROFIT 515,945 552,299 1,859,795 1,228,809
MARKETING AND SALES
EXPENSE 185,767 178,107 495,997 492,557
GENERAL AND
ADMINISTRATIVE EXPENSE 265,843 273,185 862,054 976,568
RESEARCH AND
DEVELOPMENT EXPENSE 119,979 59,829 320,740 264,406
----------- ----------- ----------- -----------
INCOME (LOSS) FROM
OPERATIONS (55,644) 41,178 181,004 (504,722)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest income 1,531 842 4,194 5,688
Interest expense (21,623) (26,834) (66,555) (84,057)
Financing expense - - - (76,387)
Gain on disposal of
equipment - - 10,251 -
----------- ----------- ----------- -----------
(20,092) (25,992) (52,110) (154,756)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAX (75,736) 15,186 128,894 (659,478)
INCOME TAX BENEFIT
(EXPENSE) 24,304 (287) (59,064) (862)
----------- ----------- ----------- -----------
NET INCOME (LOSS) (51,432) 14,899 69,830 (660,340)
DIVIDENDS ON PREFERRED
STOCK (6,072) (6,107) (18,222) (18,322)
----------- ----------- ----------- -----------
INCOME (LOSS)
APPLICABLE TO COMMON
SHARES $ (57,504) $ 8,792 $ 51,608 $ (678,662)
=========== =========== =========== ===========
EARNINGS PER SHARE -
BASIC AND DILUTED
INCOME (LOSS) APPLICABLE
TO COMMON SHARES PER
COMMON SHARE
Basic $ (0.02) $ 0.00 $ 0.01 $ (0.19)
=========== =========== =========== ===========
Diluted $ (0.02) $ 0.00 $ 0.01 $ (0.19)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 3,773,017 3,562,259 3,742,553 3,562,186
=========== =========== =========== ===========
Diluted 3,773,017 3,896,530 3,899,852 3,562,186
=========== =========== =========== ===========
SCI ENGINEERED MATERIALS, INC.
BALANCE SHEETS
ASSETS
September 30, December 31,
2010 2009
----------- -----------
(UNAUDITED)
CURRENT ASSETS
Cash $ 1,536,513 $ 1,107,216
Accounts receivable 684,591 570,112
Inventories 965,773 1,031,777
Deferred income taxes 112,000 156,000
Prepaid expenses 45,551 977,536
----------- -----------
Total current assets 3,344,428 3,842,641
----------- -----------
PROPERTY AND EQUIPMENT, AT COST 5,713,513 5,399,326
Less accumulated depreciation (3,127,325) (2,868,198)
----------- -----------
2,586,188 2,531,128
----------- -----------
OTHER ASSETS 54,435 63,267
----------- -----------
TOTAL ASSETS $ 5,985,051 $ 6,437,036
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2010 2009
----------- -----------
(UNAUDITED)
CURRENT LIABILITIES
Short term debt $ 459,749 $ 425,664
Accounts payable 423,342 263,468
Customer deposits 80,264 1,319,455
Accrued expenses 320,548 278,157
----------- -----------
Total current liabilities 1,283,903 2,286,744
Long term debt 877,561 1,055,969
----------- -----------
Total liabilities 2,161,464 3,342,713
COMMITMENTS AND CONTINGENCIES - -
TOTAL SHAREHOLDERS' EQUITY 3,823,587 3,094,323
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 5,985,051 $ 6,437,036
=========== ===========
SCI ENGINEERED MATERIALS, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
2010 2009
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 69,830 $ (660,340)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and accretion 363,436 339,401
Amortization 2,316 2,316
Stock based compensation 153,490 331,117
Financing expense related to warrant
expiration date extension - 76,387
Gain on sale of equipment (10,251) -
Deferred income taxes 44,000 -
Inventory reserve 20,591 12,868
Credit for doubtful accounts - (8,947)
Changes in operating assets and liabilities:
Accounts receivable (114,479) (128,395)
Inventories 45,413 322,855
Prepaid expenses 931,985 (385,202)
Other assets 6,516 (3,295)
Accounts payable 159,873 163,358
Accrued expenses and customer deposits (1,201,767) (195,281)
----------- -----------
Net cash provided by (used in)
operating activities 470,953 (133,158)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of equipment 10,500 -
Purchases of property and equipment (221,111) (142,983)
----------- -----------
Net cash used in investing
activities (210,611) (142,983)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of common stock options 15,145 1,550
Net proceeds from exercise of common stock
warrants 490,799 -
Payments related to Preferred Series B dividend - (24,430)
Principal payments on capital lease obligations
and note payable (336,989) (272,335)
----------- -----------
Net cash provided by (used in)
financing activities 168,955 (295,215)
----------- -----------
NET INCREASE (DECREASE) IN CASH 429,297 (571,356)
CASH - Beginning of period 1,107,216 1,399,050
----------- -----------
CASH - End of period $ 1,536,513 $ 827,694
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the periods for:
Interest, net $ 66,555 $ 84,057
Income taxes 2,400 2,450
SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING ACTIVITIES
Property and equipment purchased by capital
lease 192,665 555,700
Increase in asset retirement obligation 4,968 4,968
Financing expense related to warrant extension - 76,387
Contact Information: For Additional Information Contact: Robert Lentz (614) 876-2000