UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark
One)
| x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the
quarterly period ended |
SEPTEMBER
30, 2015 |
OR
| ¨ | 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 |
0-11668 |
INRAD
OPTICS, INC. |
(Exact
name of registrant as specified in its charter) |
New
Jersey |
|
22-2003247 |
(State or other jurisdiction
of incorporation |
|
(I.R.S. Employer |
or organization) |
|
Identification Number) |
181
Legrand Avenue, Northvale, NJ 07647 |
(Address of principal
executive offices) |
(Zip Code) |
|
(201)
767-1910 |
(Registrant’s
telephone number, including area code) |
|
|
(Former name, former
address and formal 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 ¨
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). Yes
x No ¨
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 definition of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2
of the exchange Act. (Check one):
Large accelerated filer ¨ |
Accelerated filer ¨ |
Non-accelerated filer ¨ |
Smaller reporting company x |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
¨ No x
The number of shares of the registrant’s
common stock outstanding, $0.01 par value, as of, November 12, 2015 was 12,733,208
INRAD OPTICS, INC. AND SUBSIDIARIES
INDEX
INRAD OPTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
| |
September 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(Unaudited) | | |
(Audited) | |
| |
| | |
| |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 1,071,050 | | |
$ | 1,003,254 | |
Accounts
receivable (net of allowance for doubtful accounts of $15,000 in 2015 and 2014) | |
| 1,026,635 | | |
| 1,126,655 | |
Inventories, net | |
| 3,048,744 | | |
| 2,686,721 | |
Other current
assets | |
| 146,575 | | |
| 142,576 | |
Total
current assets | |
| 5,293,004 | | |
| 4,959,206 | |
| |
| | | |
| | |
Plant
and equipment: | |
| | | |
| | |
Plant and equipment, at cost | |
| 14,490,075 | | |
| 15,741,243 | |
Less: Accumulated
depreciation and amortization | |
| (13,256,443 | ) | |
| (14,172,811 | ) |
Total plant
and equipment | |
| 1,233,632 | | |
| 1,568,432 | |
| |
| | | |
| | |
Precious
Metals | |
| 553,925 | | |
| 553,925 | |
Intangible Assets, net | |
| 221,266 | | |
| 280,196 | |
Other Assets | |
| 34,656 | | |
| 34,656 | |
Total
Assets | |
$ | 7,336,483 | | |
$ | 7,396,415 | |
| |
| | | |
| | |
Liabilities and Shareholders’
Equity | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | |
Current portion of other long
term notes | |
$ | 164,100 | | |
$ | 164,100 | |
Accounts payable and accrued
liabilities | |
| 923,188 | | |
| 1,017,755 | |
Customer
advances | |
| 279,813 | | |
| 170,166 | |
Total
current liabilities | |
| 1,367,101 | | |
| 1,352,021 | |
| |
| | | |
| | |
Related Party Convertible Notes Payable | |
| 2,500,000 | | |
| 2,500,000 | |
| |
| | | |
| | |
Other Long Term Notes, net
of current portion | |
| 426,916 | | |
| 548,747 | |
Total
liabilities | |
| 4,294,017 | | |
| 4,400,768 | |
| |
| | | |
| | |
Commitments | |
| | | |
| | |
| |
| | | |
| | |
Shareholders’ Equity: | |
| | | |
| | |
Common stock: $.01 par value;
60,000,000 authorized shares; 12,737,808 shares issued at September 30, 2015 and 12,354,093 issued at December
31, 2014 | |
| 127,380 | | |
| 123,543 | |
Capital in excess of par value | |
| 18,532,682 | | |
| 18,437,405 | |
Accumulated
deficit | |
| (15,602,646 | ) | |
| (15,550,351 | ) |
| |
| 3,057,416 | | |
| 3,010,597 | |
Less -
Common stock in treasury, at cost (4,600 shares) | |
| (14,950 | ) | |
| (14,950 | ) |
Total
shareholders’ equity | |
| 3,042,466 | | |
| 2,995,647 | |
Total
Liabilities and Shareholders’ Equity | |
$ | 7,336,483 | | |
$ | 7,396,415 | |
See Notes to Condensed Consolidated Financial
Statements (Unaudited)
INRAD OPTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| |
Three Months Ended September
30, | | |
Nine Months Ended September
30, | |
| |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| |
| | |
| | |
| | |
| |
Total revenue | |
$ | 2,799,952 | | |
$ | 2,912,538 | | |
$ | 8,095,543 | | |
$ | 7,044,464 | |
| |
| | | |
| | | |
| | | |
| | |
Cost and expenses: | |
| | | |
| | | |
| | | |
| | |
Cost of goods sold | |
| 2,038,459 | | |
| 2,309,808 | | |
| 6,108,230 | | |
| 6,598,486 | |
Restructuring costs | |
| — | | |
| — | | |
| - | | |
| 120,616 | |
Selling, general and administrative
expenses | |
| 582,459 | | |
| 744,815 | | |
| 1,912,213 | | |
| 2,348,501 | |
| |
| 2,620,918 | | |
| 3,054,623 | | |
| 8,020,443 | | |
| 9,067,603 | |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) from operations
| |
| 179,034 | | |
| (142,085 | ) | |
| 75,100 | | |
| (2,023,139 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expense: | |
| | | |
| | | |
| | | |
| | |
Interest expense—net | |
| (43,941 | ) | |
| (45,544 | ) | |
| (132,887 | ) | |
| (135,728 | ) |
Gain on sale of plant and equipment | |
| 5,500 | | |
| — | | |
| 5,500 | | |
| 65,075 | |
Gain on sale of precious metals | |
| - | | |
| 97,008 | | |
| - | | |
| 97,008 | |
| |
| (38,441 | ) | |
| 51,464 | | |
| (127,387 | ) | |
| 26,355 | |
| |
| | | |
| | | |
| | | |
| | |
Net income (loss) before income taxes
| |
| 140,593 | | |
| (90,621 | ) | |
| (52,287 | ) | |
| (1,996,784 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income tax (provision) benefit | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Net Income (loss) | |
$ | 140,593 | | |
$ | (90,621 | ) | |
$ | (52,287 | ) | |
$ | (1,996,784 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net
income (loss) per common share—basic and diluted
| |
$ | 0.01 | | |
$ | (0.01 | ) | |
$ | (0.00 | ) | |
$ | (0.16 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding—basic | |
| 12,733,208 | | |
| 12,349,490 | | |
| 12,528,560 | | |
| 12,188,408 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares outstanding—diluted | |
| 12,812,542 | | |
| 12,349,490 | | |
| 12,528,560 | | |
| 12,188,408 | |
See Notes to Condensed Consolidated Financial
Statements (Unaudited)
INRAD OPTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
| |
Nine
Months Ended September
30, | |
| |
2015 | | |
2014 | |
| |
| | |
| |
Cash flows from operating activities: | |
| | | |
| | |
Net (loss) | |
$ | (52,287 | ) | |
$ | (1,996,784 | ) |
| |
| | | |
| | |
Adjustments to reconcile net (loss)
to net cash (used in) provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 420,675 | | |
| 462,884 | |
401K common stock contribution | |
| 79,537 | | |
| 71,255 | |
Gain on sale of plant and equipment | |
| (5,500 | ) | |
| (65,075 | ) |
Gain on sale of precious metals | |
| - | | |
| (97,008 | ) |
Stock based compensation | |
| 19,577 | | |
| 69,223 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 100,020 | | |
| (202,478 | ) |
Inventories, net | |
| (362,023 | ) | |
| 392,100 | |
Other current assets | |
| (3,999 | ) | |
| 7,296 | |
Accounts payable and accrued liabilities | |
| (94,567 | ) | |
| 163,655 | |
Customer advances | |
| 109,647 | | |
| 23,859 | |
Total adjustments and changes | |
| 263,367 | | |
| 825,711 | |
Net cash provided by (used in) operating
activities | |
| 211,080 | | |
| (1,171,073 | ) |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Capital expenditures | |
| (26,953 | ) | |
| (382,331 | ) |
Proceeds from sale of plant and equipment | |
| 5,500 | | |
| 78,380 | |
Proceeds from sale of precious metals | |
| - | | |
| 18,043 | |
Net cash (used in) investing activities | |
| (21,453 | ) | |
| (285,908 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Principal payments on notes payable-other | |
| (121,831 | ) | |
| (116,814 | ) |
Net cash (used in) financing
activities | |
| (121,831 | ) | |
| (116,814 | ) |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| 67,796 | | |
| (1,573,795 | ) |
| |
| | | |
| | |
Cash and cash equivalents at beginning of period | |
| 1,003,254 | | |
| 2,451,263 | |
| |
| | | |
| | |
Cash and cash equivalents at end of period | |
$ | 1,071,050 | | |
$ | 877,468 | |
| |
| | | |
| | |
Supplemental Disclosure of Cash Flow Information: | |
| | | |
| | |
Interest paid | |
$ | 133,560 | | |
$ | 101,000 | |
Income taxes paid | |
$ | 1,800 | | |
$ | 2,000 | |
| |
| | | |
| | |
Non-Cash Financing Activities: | |
| | | |
| | |
Exchange of precious metals | |
$ | - | | |
$ | 126,755 | |
See Notes to Condensed Consolidated Financial
Statements (Unaudited)
INRAD OPTICS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 -SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements include the accounts of Inrad Optics, Inc. and its subsidiaries (collectively, the “Company”).
All significant intercompany balances and transactions have been eliminated.
The condensed
consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.
GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been
included. The results of operations of any interim period are not necessarily indicative of the results of operations to
be expected for the full fiscal year. For further information, refer to the consolidated financial statements and accompanying
footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
In preparing these consolidated financial
statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated
financial statements were issued.
Management Estimates
These unaudited condensed consolidated
financial statements and related disclosures have been prepared in conformity with U.S. GAAP which requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses reported in those financial statements.
Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including
the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their
effects cannot be determined with precision, actual results could differ significantly from those estimates and assumptions.
Significant changes, if any, in those estimates resulting from continuing changes in the economic environment will be reflected
in the consolidated financial statements in future periods.
Inventories
Inventories are stated at the lower of
cost (first-in-first-out basis) or market. The Company records a reserve for slow moving inventory as a charge against earnings
for all products identified as surplus, slow-moving or discontinued. Excess work-in-process costs are charged against earnings
whenever estimated costs-of-completion exceed unbilled revenues.
Inventories are comprised of the following
and are shown net of inventory reserves, in thousands:
| |
September
30, 2015 | | |
December
31, 2014 | |
| |
(Unaudited) |
| |
Raw
materials | |
$ | 1,144 | | |
$ | 1,049 | |
Work in process,
including manufactured parts and components | |
| 1,200 | | |
| 956 | |
Finished
goods | |
| 705 | | |
| 682 | |
| |
$ | 3,049 | | |
$ | 2,687 | |
Income Taxes
The Company recognizes deferred tax assets
and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial
statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements
carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences
are expected to reverse.
For the three months ended September 30,
2015, the Company did not record a current provision for either state or federal income tax due to the availability of net operating
loss carry-forwards to offset against federal and state income tax. For the nine months ended September 30, 2015 and the three
and nine months ended September 30, 2014, the Company did not record a current provision for either state or federal income tax
due to the losses incurred for both income tax and financial reporting purposes.
In evaluating the Company’s ability
to recover deferred tax assets in future periods, management considers the available positive and negative factors, including
the Company’s recent operating results, the existence of cumulative losses and near term forecasts of future taxable income
consistent with the plans and estimates that management uses to manage the underlying business. .A significant piece of objective
negative evidence evaluated was the cumulative loss incurred by the Company in the three-year period ended December 31, 2014 and
the nine month period ended September 30, 2015. Such objective evidence limits the ability to consider other subjective evidence
such as our projections for future growth.
On the basis of this evaluation as of
September 30, 2015, the Company’s management concluded that it is more likely than not that the Company will not be able
to realize any portion of the benefit on the net deferred tax balance of $4,656,000 and therefore the Company continues to maintain
a valuation allowance for the full amount of the net deferred tax balance.
When sufficient positive evidence exists,
the Company’s income tax expense will be charged with the increase or decrease in its valuation allowance. An increase or
reversal of the Company’s valuation allowance could have a significant negative or positive impact on the Company’s
future earnings.
Net Income (Loss) per Common Share
Basic net income (loss) per common share
is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted
net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares and
common stock equivalents outstanding, calculated on the treasury stock method for options, stock grants and warrants using the
average market prices during the period, including potential common shares issuable upon conversion of outstanding convertible
notes, except if the effect on the per share amounts is anti-dilutive.
For the three
months ended September 30, 2015, 79,334 common stock options were included in the computation of diluted net income per share
and 2,500,000 common shares and 1,875,000 warrants issuable upon conversion of outstanding related party convertible notes were
excluded from the computation of diluted net loss per share because their effect is anti-dilutive. For the nine months ended September
30, 2015 all common stock equivalents were excluded from the computation of diluted net loss per share because their effect is
anti-dilutive. This included 2,500,000 common shares and 1,875,000 warrants issuable upon conversion of outstanding related party
convertible notes in each respective period, in addition to 820,644 common stock options.
For the three and nine months ended September
30, 2014, all common stock equivalents were excluded from the computation of diluted net loss per share because their effect is
anti-dilutive. This included 2,500,000 common shares and 1,875,000 warrants issuable upon conversion of outstanding related party
convertible notes in each respective period, in addition to 908,017 common stock options and grants, in each respective period.
Stock-Based Compensation
Stock-based
compensation expense is estimated at the grant date based on the fair value of the award. The Company estimates the fair value
of stock options granted using the Black-Scholes option pricing model. The
fair value of restricted stock units granted is based on the closing market price of the Company’s common stock on the date
of the grant. The fair value of these awards, adjusted for estimated forfeitures, is amortized over the requisite service period
of the award, which is generally the vesting period.
Recently Adopted Accounting Standards
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation
of Interest (Subtopic 835-30) (“ASU 2015-03”). ASU 2015-03 was issued to simplify the presentation of debt issuance
costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet
as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement
guidance for debt issuance costs are not affected by these amendments. This guidance should be applied on a retrospective basis,
wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying
the new guidance. The guidance will be effective for financial statements issued for fiscal years beginning after December 15,
2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously
issued. The adoption of this amendment is not expected to have a material impact on the Company’s consolidated financial
statements.
In January 2015, the FASB issued ASU 2015-01, Income Statement
– Extraordinary and Unusual Items (Subtopic 225-20) (“ASU 2015-01”). ASU 2015-01 changed the requirements for
reporting extraordinary and unusual items in the income statement. The update eliminates the concept of extraordinary items. The
presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded
to include items that are both unusual in nature and infrequently occurring. A reporting entity may apply the amendments prospectively
or retrospectively to all periods presented in the financial statements. The guidance will be effective for fiscal years, and
interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance
is applied from the beginning of the fiscal year of adoption. The adoption of this newly issued guidance is not expected to have
an impact to our consolidated financial statements.
In August 2014, the Financial Accounting Standards Board (the
“FASB”) issued authoritative accounting guidance related to management’s responsibility to evaluate whether
there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures.
Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the
date that the financial statements are issued. In doing so, the amendments should reduce diversity in the timing and content of
footnote disclosures. This guidance is effective for public and non-public entities for annual periods ending after December 15,
2016, and interim periods thereafter. Early adoption is permitted. The Company is currently assessing the expected impact, if
any, that this Accounting Standards Update will have on its consolidated financial statements.
In May 2014, the Financial Accounting Standards Board (the
“FASB”) issued an Accounting Standards Update (“ASU”) which supersedes virtually all existing revenue
recognition guidance under U.S. GAAP. The update's core principle is that an entity should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. In July 2015, the FASB deferred the effective date for annual reporting periods beginning
after December 15, 2017 (including interim periods within those periods). Early adoption is permitted to the original effective
date of December 15, 2016, (including interim periods within those periods). The Company is currently assessing the potential
impact of adoption on its consolidated financial statements.
NOTE 2- EQUITY COMPENSATION PROGRAM AND STOCK BASED COMPENSATION
The Company's results of operations for
the three months ended September 30, 2015 and 2014 include stock-based compensation expense for stock option grants totaling $6,549
and $11,260, respectively. Such amounts have been included in the accompanying Condensed Consolidated Statements of Operations
within cost of goods sold in the amount of $1,217 ($5,946 for 2014), and selling, general and administrative expenses in the amount
of $5,332 ($5,314 for 2014).
The Company's results of operations for
the nine months ended September 30, 2015 and 2014 include stock-based compensation expense for stock option grants totaling $19,577
and $68,011, respectively. Such amounts have been included in the accompanying Condensed Consolidated Statements of Operations
within cost of goods sold in the amount of $3,581 ($33,136 for 2014), and selling, general and administrative expenses in the
amount of $15,996 ($34,875 for 2014).
As of September 30, 2015 and 2014, there
were $31,918 and $49,919 of unrecognized compensation cost, net of estimated forfeitures, related to non-vested stock options,
which are expected to be recognized over a weighted average period of approximately 1.3 years and .5 years, respectively.
There were 133,000 and 103,000 stock options
granted during the nine months ended September 30, 2015 and 2014. The following range of weighted-average assumptions were used
to determine the fair value of stock option grants during the nine months ended September 30, 2015 and 2014:
| |
Nine
Months Ended | |
| |
September
30, | |
| |
2015 | | |
2014 | |
Expected Dividend yield | |
| — | % | |
| — | % |
Expected Volatility | |
| 122-127 | % | |
| 116.4 | % |
Risk-free interest rate | |
| 2.0 | % | |
| 1.9 | % |
Expected term | |
| 10 years | | |
| 10 years | |
The following table represents stock options
granted, exercised and forfeited during the nine month period ended September 30, 2015:
Stock Options | |
Number of Options | | |
Weighted
Average Exercise Price
per Option | | |
Weighted
Average Remaining
Contractual
Term (years) | | |
Aggregate Intrinsic Value | |
Outstanding at January 1, 2015 | |
| 877,817 | | |
$ | .93 | | |
| 5.1 | | |
$ | — | |
Granted | |
| 133,000 | | |
| .20 | | |
| | | |
| | |
Exercised | |
| — | | |
| — | | |
| | | |
| | |
Expired/Forfeited | |
| (190,173 | ) | |
| 1.08 | | |
| | | |
| | |
Outstanding at September 30, 2015 | |
| 820,644 | | |
$ | .77 | | |
| 5.0 | | |
$ | 17,795 | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable at September 30, 2015 | |
| 613,582 | | |
$ | .96 | | |
| 4.7 | | |
$ | 3,531 | |
The following table represents
non-vested stock options granted, vested and forfeited for the nine months ended September 30, 2015.
| |
Options | | |
Weighted-Average
Grant-Date Fair Value | |
Non-vested - January 1, 2015 | |
| 150,059 | | |
| 0.27 | |
Granted | |
| 133,000 | | |
$ | 0.19 | |
Vested | |
| (59,330 | ) | |
$ | 0.29 | |
Forfeited | |
| (16,667 | ) | |
$ | 0.23 | |
Non-vested – September 30, 2015 | |
| 207,062 | | |
$ | 0.21 | |
The total fair value of options vested
during the nine months ended September 30, 2015 and 2014 was $17,336 and $70,294, respectively.
| c) | Restricted Stock Unit Awards |
The Company's results of operations for
the nine months ended September 30, 2015 and 2014 include stock-based compensation expense for restricted stock unit grants totaling
$0 and $1,212, respectively, and such amounts have been included in the accompanying Consolidated Statements of Operations within
selling, general and administrative expenses.
NOTE 3- STOCKHOLDERS’ EQUITY
In April 2015, the Company issued an additional
383,715 common shares to the Inrad Optics 401k plan as a match to employee contributions for the year ended December 31, 2014.
NOTE 4 – RELATED PARTY TRANSACTIONS
On July 29, 2014, the maturity dates of
a $1,500,000 Subordinated Convertible Promissory Note to Clarex Limited (“Clarex”) and a $1,000,000 Subordinated Convertible
Promissory Note to an affiliate of Clarex were each extended to April 1, 2017 from April 1, 2015. The notes bear interest at 6%.
Interest accrues yearly and is payable on maturity. Unpaid interest, along with principal, may be converted into securities
of the Company as follows: the notes are convertible in the aggregate into 1,500,000 units and 1,000,000 units, respectively,
with each unit consisting of one share of common stock and one warrant. Each warrant allows the holder to acquire 0.75 shares
of common stock at a price of $1.35 per share. As part of the agreement, the expiration dates of the warrants were extended from
April 1, 2018 to April 1, 2020. The Company is currently paying interest of $37,500 quarterly.
NOTE 5 – OTHER LONG TERM NOTES
On July 26, 2012, the Company entered
into a term loan agreement in the amount of $750,000 with Valley National Bank, Wayne, NJ. The loan is payable in equal monthly
installments over five years beginning in August 2012 and bears an interest rate of 4.35% annually. The loan is secured with a
security interest in equipment. The Company also has a note payable to the U.S. Small Business Administration which bears interest
at the rate of 4.0% and is due in 2032.
Other Long Term Notes consist of the following:
| |
September 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
(in thousands) | |
Term Note Payable, payable
in equal monthly installments of $13,953 and bearing an interest rate of 4.35% and expiring in July 2017 | |
$ | 294 | | |
$ | 408 | |
U.S. Small Business
Administration term note payable in equal monthly installments of $1,922 and bearing an interest rate of 4.0% and expiring
in April 2032. | |
$ | 297 | | |
$ | 305 | |
| |
| 591 | | |
| 713 | |
Less current
portion | |
| (164 | ) | |
| (164 | ) |
Long-term debt,
excluding current portion | |
$ | 427 | | |
$ | 549 | |
NOTE 6 – RESTRUCTURING COSTS
The Company completed the transfer of
the Sarasota operations to the Northvale, New Jersey facility and the Florida facility was closed as of March 31, 2014.
Restructuring charges of $0 and $121,000
were expensed in the three and nine months ended September 30, 2014, respectively. The consolidation of the operation was completed
by December 31, 2014 and there were no restructuring charges in the nine months ended September 30, 2015.
| ITEM 2. | MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Caution Regarding Forward Looking
Statements
This Quarterly Report
contains forward-looking statements as that term is defined in the federal securities laws. The Company wishes to insure that
any forward-looking statements are accompanied by meaningful cautionary statements in order to comply with the terms of the safe
harbor provided by the Private Securities Litigation Reform Act of 1995. The events described in the forward-looking statements
contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected
or anticipated benefits or other consequences of the Company’s plans or strategies, projected or anticipated benefits of
acquisitions made by the Company, projections involving anticipated revenues, earnings, or other aspects of the Company’s
operating results. The words “may”, “will”, “expect”, “believe”, “anticipate”,
“project”, “plan”, “intend”, “estimate”, and “continue”, and their
opposites and similar expressions are intended to identify forward-looking statements. The Company cautions you that these statements
are not guarantees of future performance or events and are subject to a number of uncertainties, risks, and other influences,
many of which are beyond the Company’s control, that may influence the accuracy of the statements and the projections upon
which the statements are based. Factors which may affect the Company’s results include, but are not limited to, the risks
and uncertainties discussed in Items 1A, 7 and 7A of the Company’s most recent Annual Report on Form 10-K for the year ended
December 31, 2014, as filed with the Securities and Exchange Commission on April 13, 2015. Any one or more of these uncertainties,
risks, and other influences could materially affect the Company’s results of operations and whether forward-looking statements
made by the Company ultimately prove to be accurate. Readers are further cautioned that the Company’s financial results
can vary from quarter to quarter, and the financial results for any period may not necessarily be indicative of future results.
The foregoing is not intended to be an exhaustive list of all factors that could cause actual results to differ materially from
those expressed in forward-looking statements made by the Company. The Company’s actual results, performance and achievements
could differ materially from those expressed or implied in these forward-looking statements. The Company undertakes no obligation
to publicly update or revise any forward looking statements, whether from new information, future events, or otherwise.
Critical Accounting Policies and
Estimates
Our significant accounting policies are
described in Note 1 of the accompanying consolidated financial statements and further discussed in our annual financial statements
included in our annual report on Form 10-K for the year ended December 31, 2014. In preparing our condensed consolidated financial
statements, we made estimates and judgments that affect the results of our operations and the value of assets and liabilities
we report. These include estimates used in evaluating intangibles for impairment such as market multiples used in determining
the fair value of reporting units, discount rates applicable in determining net present values of future cash flows, projections
of future sales, earnings and cash flow and capital expenditures. It also includes estimates about the amount and timing of future
taxable income in determining the Company’s valuation allowance for deferred income tax assets. Our actual results may differ
from these estimates under different assumptions or conditions.
For additional information regarding our
critical accounting policies and estimates, see the section entitled “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in our annual report filed with the Securities and Exchange Commission on Form 10-K
for the year ended December 31, 2014.
Results of Operations
Inrad Optics, Inc. operates a manufacturing
facility in Northvale, New Jersey. The Company’s business falls into two main categories: Optical Components and Laser System
Devices/Instrumentation.
The Optical Components category is focused
on custom optics manufacturing. The Company specializes in high-end precision components. It develops, manufactures and delivers
precision custom optics and thin film optical coating services through its Custom and Metal Optics operations. Glass, metal, and
crystal substrates are processed using modern manufacturing equipment, complex processes and techniques to manufacture components,
deposit optical thin films, and assemble sub-components used in advanced photonic systems. The majority of custom optical components
and optical coating services supplied are used in inspection, process control systems, defense and aerospace electro-optical systems,
laser system applications, industrial scanners, and medical system applications.
The Laser System Devices/Instrumentation
category includes the growth and fabrication of crystalline materials with electro-optic (EO) and non-linear optical properties
for use in both standard and custom products. This category also includes crystal based devices and associated instrumentation.
The majority of crystals, crystal components and laser devices that the Company manufactures are used in laser systems, defense
EO systems, medical lasers and R&D applications by engineers within corporations, universities and national laboratories.
Revenue
Sales for the three months ended September
30, 2015 were $2,800,000, a decrease of 3.9%, from $2,913,000 for the three months ended September 30,
2014. Sales to the defense and the process control and metrology markets decreased slightly in the quarter over quarter
period. This was partially offset by an increase in sales to the university and national lab market from the same period last
year. The decline in defense market sales is mainly attributable to reduced shipments to one large defense contractor partially
offset by increased sales to another defense customer. Process control and metrology sales to several large customers decreased
in the three months ended September 30, 2015 but this was offset for the most part by an increase to another large customer in
this market. One customer in the university and national lab market accounted for most of the increased sales in the third quarter
of 2015 compared to 2014.
For the nine months ended September 30,
2015, sales were $8,096,000, an increase of 14.9% or $1,051,000 from $7,044,000 for the nine months ended September 30, 2014.
This reflected increased sales in defense, up 22.4%, process control and metrology markets, up 18.3% and the university and national
lab market which increased by 63.9%. The increase in sales to the defense market was mainly due to increased shipments to two
large customers. Process control and metrology shipments increased to large customers in this market. The increase in the university
and national lab market was primarily attributable to higher year-over-year sales to one customer.
In the nine months ended September 30,
2015, no customer represented more than 10% of total sales. In the nine months ended September 30, 2014, one customer represented
more than 10% of total sales.
The Company’s top five customers
represented 42.4% of total sales in the nine month period ended September 30, 2015, compared to 44.4% in the same period in 2014.
Three of the same customers were included in the top five for each of the nine month periods ended September 30, 2015 and 2014,
respectively.
Orders booked during the first nine months
of 2015 totaled $7.6 million, down from $9.2 million in the comparable period last year.
Order backlog at September 30, 2015 and
2014 was $5.7 million and $6.5 million, respectively.
Cost of Goods Sold
For the three months ended September 30,
2015, cost of goods sold was $2,038,000 compared to $2,310,000 in the same quarter in 2014, a decrease of $272,000. For the nine
months ended September 30, 2015, cost of goods sold decreased by $490,000 or 7.4% to $6,108,000, compared to $6,598,000, before
restructuring costs of $121,000, in the same period in 2014.
The decrease in the cost of goods sold
is mainly the result of anticipated cost savings from the consolidation of the Company’s Florida operations in its Northvale,
New Jersey facility in the first quarter of 2014 and continued cost reductions in 2015, compared to the previous year, as a result
of ongoing integration of the operations.
Material costs as a percentage of sales
for the three and nine months ended September 30, 2015 were relatively unchanged compared with the same period in 2014.
For the three months ended September 30,
2015, manufacturing salaries and wages and related fringe benefits decreased by 6.1% from the three months ended September 30,
2014. For the nine months ended September 30, 2015, manufacturing salaries and wages and related fringe benefits decreased by
4.1% or approximately $144,000 from the nine months ended September 30, 2014 despite the increased sales volume in 2015. The decrease
in 2015 partially reflects cost savings resulting from the Company’s consolidation of the Florida operations in the Northvale
facility which was completed in March of 2014.
Gross profit for the three months ended
September 30, 2015 was $762,000 or 27.2% of sales compared to $603,000 or 20.7 % in the same quarter last year. Gross profit for
the nine months ended September 30, 2015 and 2014 was $1,987,000 or 24.5% and $446,000 or 6.3% of sales, respectively.
Selling, General and Administrative
Expenses
Selling, general and administrative expenses
(“SG&A” expenses) in the three and nine months ended September 30, 2015 amounted to $582,000 or 20.8% of sales
and $1,912,000 or 23.6% of sales, respectively. This compared to $745,000 or 25.6% of sales and $2,349,000 or 33.3% of sales,
respectively, for the same periods in 2014.
SG&A salaries and wages and related
fringe benefits decreased by 27.4% and 24.4% for the three and nine months ended September 30, 2015 and 2014, respectively. The
overall decrease is primarily attributable to headcount reductions related to the 2014 consolidation of the Company’s operations
in Northvale, New Jersey, in addition to, employee attrition during 2015 that the Company expects to replace over the next few
months.
For the three and nine months ended September
30, 2015, SG&A expenses excluding salary and wages, decreased by 32.5% and 7.7% compared to the three and nine months ended
September 30, 2014, respectively. For the three month period, the decrease is mainly attributable to costs for relocation and
travel associated with the facility consolidation, in addition to expenses for temporary employees and recruiting expenses in
the third quarter of 2014 that were not incurred in the third quarter of 2015.
Income (Loss) from Operations
The Company had an operating gain of $179,000 in the three months ended September 30, 2015 compared with
an operating loss of $142,000 in the three months ended September 30, 2014. For the nine months ended September 30, 2015, the
Company had an operating gain of $75,000 compared with an operating loss of $2,023,000 in the same period last year. The operating
gain in 2015 primarily reflects the impact of higher sales in the nine months ended September 30, 2015 and cost reductions in
the three and nine months ended September 30, 2015 due to the consolidation of operations in 2014. The operating loss for the
nine months ended September 30, 2014 includes $121,000 of restructuring costs related to the relocation of the Florida operations
as noted above.
Other Income and Expense
Interest expense for the three months
ended September 30, 2015 was $44,000 compared to $46,000 in the same period in 2014. Interest expense for the nine months ended
September 30, 2015 was $133,000 compared to $136,000 in the same period in 2014.
In the third quarter of 2015 the Company
sold surplus machinery and recorded a gain of $6,000. For the nine months ended September 30, 2015 and 2014, the Company had a
gain on the sale of surplus equipment in the amount of $6,000 and $65,000, respectively.
In the third quarter of 2014, the Company
recorded a gain of $97,000 as part of a transaction which included the sale of a platinum crucible for $145,000 and the purchase
of a re-designed replacement crucible for $127,000 for use in the production of high-temperature crystals.
Income Taxes
The Company recognizes deferred tax assets
and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial
statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements
carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences
are expected to reverse.
For the three months ended September 30,
2015 the Company did not record a current provision for either state or federal income tax due to the availability of net operating
loss carry-forwards to offset against federal and state income tax. For the nine months ended September 30, 2015 and the three
and nine months ended September 30, 2014, the Company did not record a current provision for either state or federal income tax
due to the losses incurred for both income tax and financial reporting purposes.
In evaluating the Company’s ability
to recover deferred tax assets in future periods, management considers the available positive and negative factors, including
the Company’s recent operating results, the existence of cumulative losses and near term forecasts of future taxable income
consistent with the plans and estimates that management uses to manage the underlying business. A significant piece of objective
negative evidence evaluated was the cumulative loss incurred by the Company over the three-year period ended December 31, 2014
and the nine month period ended September 30, 2015. Such objective evidence limits the ability to consider other subjective evidence
such as our projections for future growth.
As a result, the Company’s management
concluded that it is more likely than not that the Company will not be able to realize any portion of the benefit on the net deferred
tax balance of $4,656,000 and therefore the Company maintains a valuation allowance for the full amount of the net deferred tax
balance.
Net Income (Loss)
The Company had net income of $141,000
for the three months ended September 30, 2015 compared to a net loss of $91,000 for the same period last year. For the nine months
ended September 30, 2015, the Company had a net loss of $52,000 compared to a net loss of $1,997,000 in the comparable period
in 2014.
Liquidity and Capital Resources
The Company’s primary source of
liquidity is cash and cash equivalents and on-going collection of accounts receivable. The Company’s major use of cash in
recent years has been for financing operating losses, for payment of accrued and current interest on convertible debt, for servicing
of long term debt and for capital expenditures.
As of September 30, 2015 and December
31, 2014, the Company had cash and cash equivalents of $1,071,000 and $1,003,254, respectively.
On July 26, 2012, the Company entered
into a term loan agreement with Valley National Bank, Wayne, NJ, in the amount of $750,000. The loan is secured with a security
interest in new equipment acquired by the Company in the amount of $825,000 which enhances the Company’s thin film coating
capabilities. The loan is repayable in equal monthly installments over five years beginning in August 2012 and bears an interest
rate of 4.35%.
On July 29, 2014, the maturity dates of
a $1,500,000 Subordinated Convertible Promissory Note to Clarex Limited (“Clarex”) and a $1,000,000 Subordinated Convertible
Promissory Note to an affiliate of Clarex were each extended to April 1, 2017 from April 1, 2015. The notes bear interest at 6%.
Interest accrues yearly and is payable on maturity. Unpaid interest, along with principal, may be converted into securities
of the Company as follows: the notes are convertible in the aggregate into 1,500,000 units and 1,000,000 units, respectively,
with each unit consisting of one share of common stock and one warrant. Each warrant allows the holder to acquire 0.75 shares
of common stock at a price of $1.35 per share. As part of the agreement, the expiration dates of the warrants were extended from
April 1, 2018 to April 1, 2020. The Company is currently paying interest of $37,500 quarterly through the maturity date of the
notes to satisfy the amount of interest accruing in each quarter.
The following table summarizes net cash
provided by (used in) operating, investing and financing activities for the nine months ended September 30, 2015 and 2014:
| |
Nine Months Ended | |
| |
September
30, | |
| |
2015 | | |
2014 | |
| |
(In thousands) | |
| |
| | |
| |
Net cash provided by (used in) operating
activities | |
$ | 211 | | |
$ | (1,171 | ) |
Net cash (used in) investing activities | |
| (21 | ) | |
| (286 | ) |
Net cash (used in) financing activities | |
| (122 | ) | |
| (117 | ) |
Net increase (decrease) in cash
and cash equivalents | |
$ | 68 | | |
$ | (1,574 | ) |
Net cash provided by operating activities
was $211,000 for the nine months ended September 30, 2015 compared to net cash used in operations of $1,171,000 in the same period
last year.
The increase in net cash provided by operating
activities in the nine months ended September 30, 2015 compared to net cash used in operating activities in 2014 resulted primarily
from the Company’s improved sales and lower operating costs in the current period.
Net cash used in investing activities
was $21,000 during the nine months ended September 30, 2015 compared to $286,000 in the same period last year. Capital expenditures
for the nine months ended September 30, 2015 and 2014 were $27,000 and $382,000, respectively. The expenditures in 2015 were primarily
for leasehold improvements and operating equipment. The expenditures in 2014 were primarily incurred to refurbish the Northvale
operating facility for the relocation of the metal optics operation from Florida. The Company sold surplus machinery during the
nine months ended September 30, 2015 and 2014 for net proceeds of $6,000 and $78,000, respectively.
Net cash used in financing activities
was $122,000 and $117,000 during the nine months ended September 30, 2015 and 2014, respectively, related to required principal
payments on other long term notes.
Overall, the Company had a net increase
in cash and cash equivalents of $68,000 in the nine months ended September 30, 2015 compared with a net decrease of $1,574,000
for the comparable period last year.
The Company’s management believe
that existing cash resources and cash resources anticipated to be generated from future operating activities are sufficient to
meet working capital requirements, anticipated capital expenditures, debt servicing payments and other contractual obligations
over the next twelve months.
| ITEM 3. | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is a smaller reporting company
and is not required to provide the information required under this item.
| ITEM 4. | CONTROLS
AND PROCEDURES |
| a. | Disclosure Controls and Procedures |
Our Chief Executive Officer and Chief
Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule
13a-15(e)) as of September 30, 2015 (the “Evaluation Date”) and based on such evaluation have concluded that, as of
the Evaluation Date, our disclosure controls and procedures were effective in ensuring that information required to be disclosed
by us in the reports we file or submit under the Exchange Act (1) is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms, and (2) is accumulated and communicated to our management, including
the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
| b. | Changes
in Internal Controls over Financial Reporting |
There were no changes in our internal
control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
| PART II. | OTHER
INFORMATION |
None.
Not applicable
| ITEM 2. | UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| ITEM 3. | DEFAULTS
UNDER SENIOR SECURITIES |
None.
| ITEM 4. | MINE
SAFETY DISCLOSURES |
Not applicable
None
11. | An exhibit showing the computation of per-share earnings is omitted
because the computation can be clearly determined from the material contained in this Quarterly
Report on Form 10-Q. |
31.1 | Certificate of the Registrant’s Chief Executive Officer,
Amy Eskilson, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
31.2 | Certificate of the Registrant’s Chief Financial Officer,
William J. Foote, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
32.1 | Certificate of the Registrant’s Chief Executive Officer,
Amy Eskilson, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
32.2 | Certificate of the Registrant’s Chief Financial Officer,
William J. Foote, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
101 | The following financial information from Inrad Optics, Inc.’s
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 formatted in
Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii)
Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash
Flows, and (iv) the Notes to the Condensed Consolidated Financial Statements.* |
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.
|
|
Inrad Optics, Inc. |
|
|
|
|
By: |
/s/ Amy Eskilson |
|
|
Amy Eskilson |
|
|
President and Chief Executive Officer |
|
|
|
|
By: |
/s/ William J. Foote |
|
|
William J. Foote |
|
|
Chief Financial Officer, |
|
|
Secretary and Treasurer |
Date: November 16, 2015 |
|
|
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, Amy Eskilson certify that:
| 1. | I have reviewed the quarterly report on Form 10-Q of Inrad Optics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial
reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d -15(f)) for the registrants and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluations; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent function(s): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
Dated:
November 16, 2015 |
/s/
Amy Eskilson |
|
President and Chief Executive Officer |
A signed original of this written statement
required by Section 302 has been provided to Inrad Optics, Inc. and will be retained by Inrad Optics, Inc. and furnished to the
Securities Exchange Commission or its staff upon request.
Exhibit 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT
OF 2002
I, William J. Foote certify that:
| 1. | I have reviewed the quarterly report on Form 10-Q of Inrad Optics, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial
reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d -15(f)) for the registrants and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluations; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent function(s): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize
and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting. |
Dated: November 16, 2015 |
/s/ William J. Foote |
|
Chief Financial Officer, |
|
Secretary and Treasurer |
A signed original of this written statement
required by Section 302 has been provided to Inrad Optics, Inc. and will be retained by Inrad Optics, Inc. and furnished to the
Securities Exchange Commission or its staff upon request.
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarterly Report
of Inrad Optics, Inc. on Form 10-Q for the period ended September 30, 2015 filed with the Securities and Exchange Commission (the
“Report”), I, Amy Eskilson, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act
of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the consolidated
financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods
presented. |
Dated: November 16, 2015 |
|
|
|
|
/s/ Amy Eskilson |
|
President and Chief Executive Officer |
This certification has been furnished solely
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and has not been filed as part of the Report or as a separate disclosure
document.
A signed original of this written statement
required by Section 906 has been provided to Inrad Optics, Inc. and will be retained by Inrad Optics, Inc. and furnished to the
Securities Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
In connection with the Quarterly Report
of Inrad Optics, Inc. on Form 10-Q for the period ended September 30, 2015 filed with the Securities and Exchange Commission (the
“Report”), I, William J. Foote, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act
of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the consolidated
financial condition of the Company as of the dates presented and the consolidated result of operations of the Company for the periods
presented. |
Dated: November 16, 2015 |
|
|
|
|
/s/ William J. Foote |
|
Chief Financial Officer, |
|
Secretary and Treasurer |
This certification has been furnished solely
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and has not been filed as part of the Report or as a separate disclosure
document.
A signed original of this written statement
required by Section 906 has been provided to Inrad Optics, Inc. and will be retained by Inrad Optics, Inc. and furnished to the
Securities Exchange Commission or its staff upon request.
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