UNIROYAL GLOBAL ENGINEERED PRODUCTS, INC. - Quarter Report: 2013 March (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

Commission file number:  000-50081

INVISA, INC.

(Name of registrant as specified in its charter)

1800 2nd Street, Suite 965, Sarasota, Florida 34236

(Address of principal executive offices)

(941) 870-3950

(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 þ  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 þ  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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ¨ No þ

State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date, April 22, 2013: 14,214,398

Transitional Small Business Disclosure Format (check one):   Yes ¨ No þ

INVISA, INC.

Form 10-Q

Table of Contents

 INVISA, INC.

CONDENSED BALANCE SHEETS

See notes to condensed financial statements.

INVISA, INC.

CONDENSED STATEMENTS OF OPERATIONS 

(Unaudited)

 See notes to condensed financial statements.

INVISA, INC.

CONDENSED STATEMENTS OF CASH FLOWS 

(Unaudited)

See notes to condensed financial statements.

INVISA, INC

Notes to Condensed Financial Statements

March 31, 2013

(Unaudited)

Note A – Basis of Presentation

The accompanying unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and Rule 8.03 of Regulation SX. The December 31, 2012 balance sheet data was derived from audited financial statements, the accompanying financial statements do not include all of the information and notes required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of Invisa, Inc. for the year ended December 31, 2012. When used in these notes, the terms “Company”, “we,” “us” or “our” mean Invisa, Inc. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Invisa, Inc., (the “Company” or “Invisa”) is an enterprise that incorporates safety system technology and products into automated closure devices, such as parking gates, sliding gates, overhead garage doors and commercial overhead doors. Invisa has also demonstrated production-ready prototypes of security products for the museum and other markets. The Company is currently manufacturing and selling powered closure safety devices.

Note B – Operating Matters and Liquidity

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ending March 31, 2013, the Company has had a net loss of $(63,773). See Note D – Long-Term Debt for substantial restructuring of the Company’s debt, including extension of the Company’s debt payment dates.

Note C – Due to Stockholders and Officers

Due to Stockholders and Officers at December 31, 2012 and March 31, 2013 is as follows:

Note D – Long-Term Debt

The Company has six credit facilities with its Senior Lender totaling $1,203,319 under which $987,951 has been borrowed at March 31, 2013. The Senior Lender has also established a revolving line of credit to finance operations of the Company totaling $200,000 of which $33,770 is outstanding at March 31, 2013, and $166,230 is available to the Company. The terms of the credit facilities include due dates of March 31, 2015, with interest accruing at ten percent per annum and all of the Company’s assets being pledged as security. In addition, the credit facilities are secured by 31,413,333 shares of the Company’s common stock which is held in escrow.

At March 31, 2013, $26,233 in interest has been accrued on the credit facilities.

Note E – Stockholders’ Deficit

During the quarter ended March 31, 2013, the Company authorized the issuance of 135,000 shares of Common stock for services. The fair value of the shares based on the trading price of the Company’s common stock of $30,000 was charged to operations.

As of March 31, 2013, no stock options were outstanding, granted or exercised.

During the three months ended March 31, 2013, an officer contributed services with a fair value of $9,000 to the capital of the Company.

Note F – Recent Accounting Pronouncements

The Company does not believe that any recently issued accounting pronouncements will have a material effect on its financial statements.

Note G – Inventory

Inventory is stated at the lower of cost or market. Cost is determined using an averaging method, which approximates the first in – first out method. Inventory consists principally of finished goods and raw materials.

Note H – Earnings (loss) per Common Share

Basic and diluted earnings (loss) per share are computed based on the weighted average number of common stock outstanding during the period. Common stock equivalents are not considered in the calculation of diluted earnings (loss) per share for the periods presented because their effect would not be material or would be anti-dilutive.

Note I – Gain on the Derecognition of Debt

During the period ended March 31, 2013, the Company wrote off $43,607 in debt as it determined that the period of enforceability of the debt had expired pursuant to the Florida statute of limitations.

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our condensed financial statements and related notes appearing elsewhere in this filing. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements. The cautionary statements made herein should be read as being applicable to all related forward-looking statements in this Quarterly Report on Form 10-Q.

Background of Our Company

We manufacture and sell sensors using the Company’s patented InvisaShield™ presence-sensing technology in the safety market. We market our line of safety sensors under the name of SmartGate ® brand safety sensors used in or with parking barrier gates to protect life and property. All of our sales revenues are derived from the sale of our SmartGate safety sensors.

We financed our operations in 2012 and 2013 through revenues derived from the sale of our SmartGate ® brand safety sensors and short-term and long-term debt financing. We are focusing our efforts on increasing our sales of our products and reducing operating costs, where possible. In December 2012, the Company’s Senior Lender agreed to extend the maturity date of the Senior Secured Promissory Notes and the related accrued interest until March 31, 2015, and put in place a line of credit which we believe is sufficient to finance our operations through December 31, 2013.

Quarter Ended March 31, 2012 Compared to the Quarter Ended March 31, 2013

Net Sales – During the quarters ended March 31, 2012 and 2013, product sales totaled $6,314 and $5,943, respectively. We had a gross profit of $3,268 for the quarter ended March 31, 2012 and gross profit of $3,967 for the quarter ended March 31, 2013. Gross margin, during the quarters ended March 31, was 52 percent during 2012 and 67 percent during 2013.

Selling, General and Administrative Expenses - During the first quarter of 2012 and 2013 selling, general and administrative expenses totaled $89,441 and $85,114 respectively.

Interest (Expense) and other, Net - During first quarter of 2012 and 2013 interest (expense) and other totaled ($27,384), and ($26,233), respectively. The interest expense during both 2012 and 2013 relates primarily to financing costs and interest due our Senior Lender under Notes and a line of credit to the Company.

Gain on the Derecognition of Debt - During the period ended March 31, 2013, the Company wrote off $43,607 in debt as it determined that the period of enforceability of the debt had expired pursuant to the Florida statute of limitations.

Net Income (Loss) - Net loss during the quarters ended March 31, decreased from ($113,557) in 2012 to ($63,773) in 2013. This decrease resulted principally from decreased selling, general and administrative expenses and a gain on debt extinguishment.

Plan of Development and Operations

We obtained funding of $48,183 in the first quarter of 2012 and $33,770 in the same period in 2013, which together with our cash from sales supported our operations. We have extended the maturity of our debt to March 31, 2015, and put in place a line of credit which we believe is sufficient to finance our operations through December 31, 2013 (See Note D - Long-Term Debt to the accompanying condensed financial statements) and are exploring other business opportunities such as licensing and business combinations.

Liquidity and Capital Resources

At March 31, 2013, we had cash and cash equivalents totaling $3,138.

As of March 31, 2013, the Company has borrowed $1,021,721 (including $33,770 of our Line of Credit) due and owing its Senior Lender. The financing arrangements are set forth in a series of Notes having similar terms and maturity dates of March 31, 2015, specifically (i) $100,000 issued in 2007, (ii) $100,000 in 2008, (iii) three notes aggregating $328,319 in 2010 and (iv) $250,000 in 2011.  In addition, the Company has a line of credit in the amount of $200,000. Each note and the line bears interest at 10 percent per annum and is secured by all of the assets of the Company.

Additionally, the Company has pledged an aggregate of 25,413,333 shares of its common stock as additional security for the notes and the line. These shares are being held in reserve as additional collateral against such notes and line. Upon full repayment of the notes, said shares will be no longer be held in reserve. The shares held in reserve are not deemed outstanding as the notes are not in default.

While we are confident that the current funding and sales revenue available to us will be sufficient to finance our operations through December 31, 2013, it is important to note that additional funding, if needed, may not be available when required or it may not be available on acceptable terms. Should we require additional funding, we may need to reduce or refocus our operations or obtain funds through arrangements that would be less attractive to us or which may require us to relinquish rights to certain or potential markets, either of which could have a material adverse effect on our business, financial condition and results of operations.

None.

The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2013 and concluded that our disclosure controls and procedures were effective as of March 31, 2013.

Changes in Internal Controls Over Financial Reporting

During the quarter ended March 31, 2013, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d–15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

None.

There have been no material changes from the risk factors as previously disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2012.

None.

None.

None.

None.

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, Invisa, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.