**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**Form10-QSB**

 

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**QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF THESECURITIES EXCHANGE ACT OF 1934**

 

**For theQuarterly Period Ended April 30, 2005**

 

**CommissionFile Number 0-11518**

 

**PPTVISION, INC.**

(Exact name ofSmall Business Issuer as specified in its charter)

 

| **MINNESOTA**                                          | ** ** | **41-1413345**                     |
|--------------------------------------------------------|------------|------------------------------------|
| (State or other  jurisdiction of                       |       | (I.R.S. Employer                   |
| incorporation or  organization)                        |       | Identification  Number)            |
|                                                   |       |                               |
| **12988  Valley View Road**                            |       | **Eden  Prairie, Minnesota 55344** |
| (Address of  principal executive offices)              |       | (Zip Code)                         |
|                                                   |       |                               |
| **(952)  996-9500**                                    |
| (Issuer’s  telephone number, including area code) |

 

Check whether the issuer(1) has filed all reports required to be filed by Section 13 or 15(d) of theExchange Act during the preceding 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has been subject tosuch filing requirements for the last 90 days. Yes ý  No o

 

Shares of $.10 par valuecommon stock outstanding at May 31, 2005: **2,996,805**

 

 

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INDEX

 

PPT VISION, INC.

 
| Part I.  |   | Financial Information                                                                          |   |   |
|----------|--------|------------------------------------------------------------------------------------------------|--------|--------|
|     |   |                                                                                           |   |   |
| Item 1.  |   | Financial Statements                                                                           |   |   |
|     |   |                                                                                           |   |   |
|     |   | Balance  Sheets as of April 30, 2005 and October 31, 2004                                      |   |   |
|     |   |                                                                                           |   |   |
|     |   | Statements of Operations for  the Three and Six Months Ended April 30, 2005 and April 30, 2004 |   |   |
|     |   |                                                                                           |   |   |
|     |   | Statements of Cash Flows for  the Six Months Ended April 30, 2005 and April 30, 2004           |   |   |
|     |   |                                                                                           |   |   |
|     |   | Notes to Condensed  Financial Statements – April 30, 2005                                 |   |   |
|     |   |                                                                                           |   |   |
| Item 2.  |   | Management’s Discussion and Analysis or Plan of  Operation                                |   |   |
|     |   |                                                                                           |   |   |
| Item 3.  |   | Controls and Procedures                                                                        |   |   |
|     |   |                                                                                           |   |   |
| Part II. |   | Other Information                                                                              |   |   |
|     |   |                                                                                           |   |   |
| Item  1. |   | Legal  Proceedings                                                                             |   |   |
|     |   |                                                                                           |   |   |
| Item  2. |   | Unregistered  Sales of Equity Securities and Use of Proceeds                                   |   |   |
|     |   |                                                                                           |   |   |
| Item 3.  |   | Defaults Upon  Senior Securities                                                               |   |   |
|     |   |                                                                                           |   |   |
| Item 4.  |   | Submission of  Matters to a Vote of Security Holders                                           |   |   |
|     |   |                                                                                           |   |   |
| Item  5. |   | Other  Information                                                                             |   |   |
|     |   |                                                                                           |   |   |
| Item 6.  |   | Exhibits                                                                                       |   |   |
|     |   |                                                                                           |   |   |
|     |   | Signatures                                                                                     |   |   |

 

2

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PPT VISION, INC.

 

BALANCE SHEETS

 
| ** **                                       | ** ** | **April 30, 2005** | ** ** | **October 31, 2004** | ** ** |
|--------------------------------------------------|------------|--------------------|------------|----------------------|------------|
| ** **                                       | ** ** | **(unaudited)**    | ** ** | **(audited)**        | ** ** |
| ASSETS                                           |       |               |       |                 |       |
| Current assets                                   |       |               |       |                 |       |
| Cash and cash  equivalents                       |       | $                  | 1,357,000  |                 | $          | 2,617,000 |   |
| Accounts  receivable, net                        |       | 1,311,000          |       | 1,912,000            |       |
| Inventories:                                     |       |               |       |                 |       |
| Manufactured and  purchased parts                |       | 865,000            |       | 828,000              |       |
| Work-in-process                                  |       | 85,000             |       | 105,000              |       |
| Finished goods                                   |       | 39,000             |       | 44,000               |       |
| Total  inventories, net                          |       | 989,000            |       | 977,000              |       |
| Other current  assets                            |       | 162,000            |       | 243,000              |       |
| Assets of  discontinued operations               |       | —             |       | 200,000              |       |
| Total current  assets                            |       | 3,819,000          |       | 5,949,000            |       |
|                                             |       |               |       |                 |       |
| Fixed assets,  net                               |       | 256,000            |       | 323,000              |       |
| Intangible assets,  net                          |       | 87,000             |       | 109,000              |       |
| Other assets                                     |       | 193,000            |       | 53,000               |       |
| Total assets                                     |       | $                  | 4,355,000  |                 | $          | 6,434,000 |   |
|                                             |       |               |       |                 |       |
| LIABILITIES AND  SHAREHOLDERS’ EQUITY       |       |               |       |                 |       |
| Current  liabilities                             |       |               |       |                 |       |
| Accounts payable                                 |       | $                  | 439,000    |                 | $          | 944,000 |   |
| Accrued expenses                                 |       | 458,000            |       | 513,000              |       |
| Deferred revenue  – customer advances       |       | 12,000             |       | 54,000               |       |
| Total current  liabilities                       |       | 909,000            |       | 1,511,000            |       |
|                                             |       |               |       |                 |       |
| Shareholders’  equity                       |       |               |       |                 |       |
| Common stock                                     |       | 300,000            |       | 300,000              |       |
| Capital in  excess of par value                  |       | 36,078,000         |       | 36,075,000           |       |
| Accumulated  deficit                             |       | (32,932,000        | )          | (31,452,000          | )          |
| Total  shareholders’ equity                 |       | 3,446,000          |       | 4,923,000            |       |
| Total  liabilities and shareholders’ equity |       | $                  | 4,355,000  |                 | $          | 6,434,000 |   |

 

See accompanyingnotes to condensed financial statements

 

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PPT VISION, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

 
| ** **                                                    | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                                    | ** ** | **April 30,**          | ** ** | **April 30,**        | ** ** |
| ** **                                                    | ** ** | **2005**               | ** ** | **2004**             | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                                    | ** ** | ** **             | ** ** | ** **           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Revenues                                                      |       | $                      | 1,567,000  |                 | $          | 2,084,000 |   | $ | 3,092,000 |   | $ | 4,060,000 |   |
| Cost of revenues                                              |       | 803,000                |       | 970,000              |       | 1,532,000 |   | 2,043,000 |   |
| Gross profit                                                  |       | 764,000                |       | 1,114,000            |       | 1,560,000 |   | 2,017,000 |   |
|                                                          |       |                   |       |                 |       |   |   |   |   |
| Expenses:                                                     |       |                   |       |                 |       |   |   |   |   |
| Sales and  marketing                                          |       | 659,000                |       | 706,000              |       | 1,345,000 |   | 1,340,000 |   |
| General and  administrative                                   |       | 269,000                |       | 300,000              |       | 560,000 |   | 582,000 |   |
| Research and  development                                     |       | 336,000                |       | 414,000              |       | 710,000 |   | 824,000 |   |
| Non-recurring  charges                                        |       | 390,000                |       | —               |       | 390,000 |   | — |   |
| Total expenses                                                |       | 1,654,000              |       | 1,420,000            |       | 3,005,000 |   | 2,746,000 |   |
|                                                          |       |                   |       |                 |       |   |   |   |   |
| Interest and other  Income                                    |       | 20,000                 |       | 2,000                |       | 20,000 |   | 2,000 |   |
| Loss from  continuing operations                              |       | (870,000               | )          | (304,000             | )          | (1,425,000 | ) | (727,000 | ) |
| Income (loss)  from discontinued operations                   |       | —                 |       | 81,000               |       | (55,000 | ) | 158,000 |   |
| Net loss                                                      |       | $                      | (870,000   | )                    | $          | (223,000 | ) | $ | (1,480,000 | ) | $ | (569,000 | ) |
| Per share data:                                               |       |                   |       |                 |       |   |   |   |   |
| Weighted average  basic shares outstanding                    |       | 2,997,000              |       | 2,951,000            |       | 2,996,000 |   | 2,951,000 |   |
| Weighted average  diluted shares outstanding                  |       | 2,997,000              |       | 2,951,000            |       | 2,996,000 |   | 2,951,000 |   |
| Basic and  diluted loss per common share                      |       |                   |       |                 |       |   |   |   |   |
| Loss from  continuing operations               |       | $                      | (0.29      | )                    | $          | (0.10 | ) | $ | (0.47 | ) | $ | (0.25 | ) |
| Income (loss)  from discontinued operations    |       | $                      | —     |                 | $          | 0.02 |   | $ | (0.02 | ) | $ | 0.06 |   |
| Net loss                                                      |       | $                      | (0.29      | )                    | $          | (0.08 | ) | $ | (0.49 | ) | $ | (0.19 | ) |

 

See accompanyingnotes to condensed financial statements

 

4

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PPT VISION, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 
| ** **                                                                   | ** ** | **Six Months**     | ** ** | **Six Months**     | ** ** |
|------------------------------------------------------------------------------|------------|--------------------|------------|--------------------|------------|
| ** **                                                                   | ** ** | **Ended**          | ** ** | **Ended**          | ** ** |
| ** **                                                                   | ** ** | **April 30, 2005** | ** ** | **April 30, 2004** | ** ** |
| Net loss                                                                     |       | $                  | (1,480,000 | )                  | $          | (569,000 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       |               |       |               |       |
| Depreciation and  amortization                                               |       | 127,000            |       | 247,000            |       |
| Loss (income)  from discontinued operations                                  |       | 55,000             |       | (158,000           | )          |
|                                                                         |       |               |       |               |       |
| Change in assets  and liabilities:                                           |       |               |       |               |       |
| Accounts  receivable                                                         |       | 601,000            |       | 67,000             |       |
| Inventories                                                                  |       | (12,000            | )          | (187,000           | )          |
| Other assets                                                                 |       | 81,000             |       | 58,000             |       |
| Accounts payable                                                             |       | (505,000           | )          | 218,000            |       |
| Accrued expenses                                                             |       | (55,000            | )          | 65,000             |       |
| Deferred revenue  - customer advances                                        |       | (42,000            | )          | (55,000            | )          |
| Total  adjustments                                                           |       | 250,000            |       | 255,000            |       |
| Net cash used in  operating activities                                       |       | (1,230,000         | )          | (314,000           | )          |
|                                                                         |       |               |       |               |       |
| Cash flows from  investing activities:                                       |       |               |       |               |       |
| Purchase of  fixed assets                                                    |       | (36,000            | )          | (76,000            | )          |
| Net investment  in other long-term assets                                    |       | (142,000           | )          | (5,000             | )          |
| Net cash used in  investing activities                                       |       | (178,000           | )          | (81,000            | )          |
|                                                                         |       |               |       |               |       |
| Cash flows from  financing activities:                                       |       |               |       |               |       |
| Proceeds from  the exercise of stock options                                 |       | 3,000              |       | 1,000              |       |
| Net cash  provided by financing activities                                   |       | 3,000              |       | 1,000              |       |
| Net cash  provided by discontinued operations                                |       | 145,000            |       | 366,000            |       |
|                                                                         |       |               |       |               |       |
| Net decrease in  cash and cash equivalents                                   |       | (1,260,000         | )          | (28,000            | )          |
|                                                                         |       |               |       |               |       |
| Cash and cash  equivalents at beginning of year                              |       | 2,617,000          |       | 2,086,000          |       |
| Cash and cash  equivalents at end of period                                  |       | $                  | 1,357,000  |               | $          | 2,058,000 |   |

 

See accompanyingnotes to condensed financial statements

 

5

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PPT VISION, INC.

NOTES TOCONDENSED FINANCIAL STATEMENTS

April 30, 2005

(UNAUDITED)

 

NOTE A - DESCRIPTION OFBUSINESS

 

PPT VISION, Inc. (“TheCompany”) designs, manufactures, and markets camera-based intelligent systemsfor automated inspection in manufacturing applications.  The Company’s products, commercially known asmachine vision systems, enable manufacturers to realize significant economicpaybacks by increasing the quality of manufactured parts and improving theproductivity of manufacturing processes. The Company’s machine vision product line is sold on a global basis toend-users, system integrators, distributors and original equipmentmanufacturers (OEM’s) primarily in the electronic and semiconductor component,automotive, medical device, and packaged goods industries.

 

NOTE B - BASIS OFPRESENTATION

 

The accompanyingunaudited condensed financial statements have been prepared in accordance withaccounting principles generally accepted in the United States of America forinterim financial information and with the instructions to Form 10-QSB.  Accordingly, they do not include all of theinformation and footnotes required by accounting principles generally acceptedin the United States of America for complete financial statements.  In the opinion of management, all adjustments(consisting of normal recurring accruals) considered necessary for a fair presentationhave been included.  Results ofoperations for the interim periods are not necessarily indicative of theresults to be expected for the full year or of the results for any futureperiods.

 

The Balance Sheet atOctober 31, 2004 has been derived from the Company’s audited financialstatements for the fiscal year ended October 31, 2004 but does not include allof the information and footnotes required by accounting principles generallyaccepted in the United States of America for complete financial statements.

 

For further information,refer to the financial statements and footnotes thereto included in the Company’sannual report on Form 10-KSB for the year ended October 31, 2004.

 

NOTE C - REVENUERECOGNITION AND COST OF REVENUES

 

The Company typicallyrecognizes revenue on product sales upon shipment to the end user customers ifcontractual obligations have been substantially met and title and risk of losshave passed to the customer, which is generally the case for sales of machinevision systems, spare parts and accessories. The Company also recognizes revenue on products sold to distributorsupon shipment because contracts with distributors do not include post-shipmentobligations or any right of return provisions and pricing is fixed at the timeof sale.  Revenue related to applicationengineering, product development and customer training services is recognizedwhen the services are performed.

 

6

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Costs of revenues includethe cost of products sold and the cost of third-party application engineers whoperform certain installation services at our request for customers.  Cost of revenues does not include any costsassociated with engineering services performed by PPT employees as these costsare a fixed component of our operating cost structure and an allocation of aportion of these costs to cost of revenues would be arbitrary and lead toinconsistent presentation of gross margins and operating costs.

 

NOTE D – LIQUIDITY ANDCAPITAL RESOURCES

 

The Company had a loss from continuing operations forthe three and six months ended April 30, 2005 of $870,000 and $1,425,000respectively.  Cash used in operationswas $1,230,000 for the six months ended April 30, 2005.  Effective May 1, 2005 the Company finalizedan agreement with its current landlord to restructure the Company’s leaseobligation with respect to its headquarters facility in Eden Prairie,Minnesota.  Under the amended leaseterms, the Company will receive a reduction in its base rental rates and itsfacility will shrink from approximately 64,000 square feet to approximately35,000 square feet resulting in a savings of approximately $120,000 perquarter.  In exchange for these amendedlease terms, the Company paid $140,000 for certain leasehold improvementsassociated with the reconfigured space and also paid approximately $300,000 inaccrued deferred rent.  The Company alsoagreed to pay a $240,000 lease termination fee in equal monthly installmentsover a 12 month period starting May 1, 2005 and extend the current lease termby two years through May, 2011.  As aresult, cash balances dropped to $1,357,000 as of April 30, 2005 from$2,617,000 at October 31, 2004.

 

TheCompany believes that existing cash balances and available sources of capital will enablethe Company to meet its operating, working capital and capital resourceobligations through the next twelve months.

 

The other sources of financing that are available tothe Company include sales of its common or preferred stock, external borrowing,customer or vendor financing, customer sponsored research and developmentprojects or investments by strategic partners.

 

There can be no assurance that the Companywill not incur additional losses for a longer period of time, will generatepositive cash flow from operations, or that the Company will attain orthereafter sustain profitability in any future period.

 

NOTE E – LOSS PER SHARE

 

On March 10, 2005, theCompany announced that its Board of Directors approved a 1-for-4 reverse splitof its common stock effective as of the close of business on March 31, 2005 andthe conversion to book-entry share registration also effective as of March 31,2005.  In connection with the reversesplit, the Board of Directors also approved an amendment to Article 4.1 of theCompany’s Articles of Incorporation to proportionately reduce the number ofshares of common stock authorized from 20,000,000 shares to 5,000,000shares.  All share numbers 

 

7

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presented in this reporthave been restated to give effect to the 1-for-4 reverse split.

 

At April 30, 2005,options to purchase 218,478 shares of the Company’s common stock were notconsidered in the calculation of diluted earnings per share.  At April 30, 2004, options to purchase265,446 shares and warrants to purchase 6,250 shares of the Company’s commonstock were not considered in the calculation of diluted earnings pershare.  As the Company had a net loss forboth periods, the inclusion of outstanding options and warrants would have beenanti-dilutive.

 

NOTE F – STOCK-BASED COMPENSATION

 

The Company uses the intrinsic value method prescribedby Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued toEmployees,” and related interpretations in accounting for employee stockoptions.  Under the intrinsic valuemethod, compensation expense is recorded only to the extent that the marketprice of the common stock exceeds the exercise price of the stock option on thedate of grant.

 

InDecember 2002, the Financial Accounting Standards Board (FASB) issued Statementof Financial Accounting Standards (SFAS) No. 148, “Accounting for Stock-BasedCompensation - Transition and Disclosure.”  SFAS No. 148 is an amendmentto SFAS No. 123 providing alternative methods of transition for a voluntarychange to the fair value based method of accounting for stock-based employeecompensation and also provides required additional disclosures about the methodof accounting for stock-based employee compensation. The Company adoptedthe annual disclosure provision of SFAS No. 148 during the year ended October31, 2003.  The Company chose to not adoptthe voluntary change to the fair value based method of accounting forstock-based employee compensation, pursuant to SFAS No. 148.

 

The Company has adoptedthe disclosure-only provisions of SFAS No. 148, Accounting for Stock-BasedCompensation.  Accordingly, nocompensation cost has been recognized with respect to stock options.  Had compensation cost for stock options beendetermined based on the fair value methodology prescribed by SFAS 123, theCompany’s net loss and net loss per share would have been reduced to the proforma amounts indicated below:

 

8

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| **Three Months Ended****April 30,** | ** ** | ** **  | ** ** | **2005** | ** ** | **2004** | ** ** |
|------------------------------------------|------------|-------------|------------|----------|------------|----------|------------|
| Net loss                                 |       | As reported |       | $        | (870,000   | )        | $          | (223,000 | ) |
|                                     |       | Pro forma   |       | $        | (893,000   | )        | $          | (273,000 | ) |
|                                     |       |        |       |     |       |     |       |
| Stock based  compensation                |       | As reported |       | $        | —     |     | $          | — |   |
|                                     |       | Pro forma   |       | $        | (23,000    | )        | $          | (50,000 | ) |
|                                     |       |        |       |     |       |     |       |
| Basic and  diluted loss per share        |       | As reported |       | $        | (0.29      | )        | $          | (0.08 | ) |
|                                     |       | Pro forma   |       | $        | (0.30      | )        | $          | (0.09 | ) |

 

| **Six Months Ended****April 30,** | ** ** | ** **  | ** ** | **2005** | ** ** | **2004** | ** ** |
|----------------------------------------|------------|-------------|------------|----------|------------|----------|------------|
| Net loss                               |       | As reported |       | $        | (1,480,000 | )        | $          | (569,000 | ) |
|                                   |       | Pro forma   |       | $        | (1,530,000 | )        | $          | (670,000 | ) |
|                                   |       |        |       |     |       |     |       |
| Stock based  compensation              |       | As reported |       | $        | —     |     | $          | — |   |
|                                   |       | Pro forma   |       | $        | (50,000    | )        | $          | (101,000 | ) |
|                                   |       |        |       |     |       |     |       |
| Basic and  diluted loss per share      |       | As reported |       | $        | (0.49      | )        | $          | (0.19 | ) |
|                                   |       | Pro forma   |       | $        | (0.51      | )        | $          | (0.23 | ) |

 

| **For All Periods Ended   April 30,** | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------|------------|----------|------------|----------|------------|
| Risk free  interest rates             |       | 4.0      | %          | 4.0      | %          |
| Expected lives                        |       | 6.0      |       | 6.0      |       |
| Expected  volatility                  |       | 115      | %          | 115      | %          |
| Expected  dividends                   |       | 0        | %          | 0        | %          |

 

NOTE G – CUSTOMER ANDGEOGRAPHIC DATA

 

The following tables set forth the percentage of theCompany’s net revenues (including sales delivered through internationaldistributors) by geographic location for the three and six months ended April30, 2005 and 2004:

 

| **Three Months Ended April 30** | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|
| United States                   |       | 42       | %          | 40       | %          |
| Europe and  Canada              |       | 30       | %          | 16       | %          |
| Asia-Pacific                    |       | 26       | %          | 43       | %          |
| South America                   |       | 2        | %          | 1        | %          |
|                            |       |     |       |     |       |
| **Six Months Ended April 30**   | ** ** | **2005** | ** ** | **2004** | ** ** |
| United States                   |       | 46       | %          | 37       | %          |
| Europe and  Canada              |       | 30       | %          | 18       | %          |
| Asia-Pacific                    |       | 23       | %          | 44       | %          |
| South America                   |       | 1        | %          | 1        | %          |

 

In the three month periodended April 30, 2005, revenues from two customers represented approximately 14%and 12% of total revenue, respectively. In the 

 

9

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three month period endedApril 30, 2004, revenues from three customers accounted for 30%, 13%, and 10%of total revenue, respectively.  In thesix month period ended April 30, 2005, revenues from two customers representedapproximately 11% and 11% of total revenue, respectively.  In the six month period ended April 30, 2004,revenues from one customer accounted for 32% of total revenue.

 

NOTE H – NEW ACCOUNTINGPRONOUNCEMENTS

 

In December 2004, FASBissued SFAS No. 153 “Exchanges of Nonmonetary Assets,” which amends APB OpinionNo. 29, “Accounting for Nonmonetary Transactions.” APB No. 29 is based on theprinciple that exchanges of nonmonetary assets should be measured based on thefair value of the assets exchanged.  Theguidance in that Opinion, however, included certain exceptions to thatprinciple. SFAS No. 153 amends APB No. 29 to eliminate the exception fornonmonetary exchanges of similar productive assets and replaces it with ageneral exception for exchanges of nonmonetary assets that do not havecommercial substance.  A nonmonetaryexchange has commercial substance if the future cash flows of the entity areexpected to change significantly as a result of the exchange.   SFAS No. 153 is effective for nonmonetaryasset exchanges occurring in fiscal periods beginning after June 15, 2005.Earlier application is permitted for nonmonetary asset exchanges occurring infiscal periods beginning after the date SFAS No. 153 was issued.  SFAS No. 153 is to be appliedprospectively.  The Company does notexpect the adoption of SFAS No. 153 to have a material effect on its financialstatements.

 

In December 2004, FASBissued SFAS No. 123 (revised 2004), “Share-Based Payment”, that focusesprimarily on accounting for transactions in which an entity obtains employeeservices in share-based payment transactions. This statement replaces SFAS No. 123, “Accounting for Stock-BasedCompensation,” and supersedes APB Opinion No. 25, “Accounting for Stock Issuedto Employees.”  Beginning with ourquarterly period that begins November 1, 2006, we will be required to expensethe fair value of employee stock options and similar awards.  As a public company, we are allowed to selectfrom two alternative transition methods, each having different reportingimplications.  We have not yet determinedthe impact of SFAS No. 123R on us.

 

NOTE I – DISCONTINUED OPERATIONS

 

In the fourth quarter offiscal 2004, the Company implemented a strategy to focus all of its resourceson its core 2D machine vision business. In accordance with this plan, in the fourth quarter of fiscal 2004, theCompany initiated and completed the sale of its 3D business unit, together withall the related patents, intellectual property, inventory and equipment.  The terms of the sale included cash paymentsof $1.0 million and the opportunity to receive royalties on sales of certainproducts by the buyer for the next five years. The royalties, which will be recorded as a part of discontinuedoperations, are anticipated to be minimal, if any.  To date there have been no royalties.  As a result of the sale, in accordance withappropriate accounting principles, the Company has revised the financialresults for all periods presented to include the 3D business as a discontinuedoperation.  Accordingly, all 3D relatedrevenue and expenses have been removed from continuing operations and presentedin a separate line in the statement of operations entitled “income or loss fromdiscontinued operations.”

 

10

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| **Condensed Statement of  Operations** | ** ** | **Quarter Ended  April 30, 2005**    | ** ** | **Quarter Ended  April 30, 2004**    | ** ** |
|----------------------------------------|------------|--------------------------------------|------------|--------------------------------------|------------|
| Revenues                               |       | $                                    | —     |                                 | $          | 536,000 |   |
| Cost of revenues                       |       | —                               |       | 118,000                              |       |
| Gross profit                           |       | —                               |       | 418,000                              |       |
| Total operating  expenses              |       | —                               |       | 337,000                              |       |
| Income from  discontinued operations   |       | $                                    | —     |                                 | $          | 81,000 |   |
|                                   |       |                                 |       |                                 |       |
| **Condensed Statement of  Operations** | ** ** | **Six-Month  Ended  April 30, 2005** | ** ** | **Six-Month  Ended  April 30, 2004** | ** ** |
| Revenues                               |       | $                                    | 169,000    |                                 | $          | 991,000 |   |
| Cost of revenues                       |       | 56,000                               |       | 176,000                              |       |
| Gross profit                           |       | 113,000                              |       | 815,000                              |       |
| Total operating  expenses              |       | 168,000                              |       | 657,000                              |       |
| Income from  discontinued Operations   |       | $                                    | (55,000    | )                                    | $          | 158,000 |   |
|                                   |       |                                 |       |                                 |       |
| **Assets**                             | ** ** | **April  30, 2005**                  | ** ** | **October  31, 2004**                | ** ** |
| Accounts  receivable                   |       | $                                    | —     |                                 | $          | 200,000 |   |
|                                        |            |                                      |            |                                      |            |  |  |  |  |

 

NOTE J – Restructuring Actions

 

In the second quarter of fiscal 2005, the Company completeda three part corporate restructuring in an effort to bring the Company’s coststructure into closer alignment with current revenues.  The first part of this plan involved theclosing of the Company’s Michigan office. The functions of the Michigan office have been transferred to several ofthe Company’s system integration partners. The second part of the plan involved the restructuring of the Company’slease obligation with respect to its headquarters facility in Eden Prairie,Minnesota. Under the amended lease terms signed on April 29, 2005, theCompany will receive a reduction in its base rental rates and its facility willshrink from approximately 64,000 square feet to approximately 35,000 squarefeet resulting in a savings of approximately $120,000 per quarter.  In exchange for these amended lease terms,the Company paid $140,000 for certain leasehold improvements associated withthe reconfigured space and also paid approximately $300,000 in accrued deferredrent.  The Company will also pay a$240,000 lease termination fee, which was accrued in the second quarter offiscal 2005, in equal monthly installments over a 12 month period starting May1, 2005 and extend the current lease term by two years through May, 2011. The third part of the planincluded certain other operating expense reductions which primarily consistedof an approximately 15% workforce reduction. When taken together, the three parts of this restructuring will resultin a reduction of the Company’s total cost structure by over $1,200,000 peryear.

 

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An analysis of thecomponents of the nonrecurring charge related to these restructuring actions isas follows:

 
| Lease termination fee and related costs |   | $      | 280,000 |   |
|-----------------------------------------|--------|--------|---------|--------|
| Michigan office  closure costs          |   | 60,000 |    |
| Severance costs                         |   | 50,000 |    |
| Total                                   |   | $      | 390,000 |   |

 

Item 2

 

MANAGEMENT’S DISCUSSIONAND ANALYSIS OR PLAN OF OPERATION

 

# Overview

 

PPT VISION, Inc. designs, manufactures, and marketscamera-based intelligent systems for automated inspection in manufacturingapplications. The Company’s products, commercially known as machine visionsystems, enable manufacturers to realize significant economic paybacks byincreasing the quality of manufactured parts and improving the productivity ofmanufacturing processes.  The Company’smachine vision product line is sold on a global basis to end-users, systemintegrators, distributors and original equipment manufacturers (OEM’s) primarilyin the electronic and semiconductor component, automotive, medical device, andpackaged goods industries.

 

The Company’s revenuesdecreased 25% to $1,567,000 during the second quarter ended April 30, 2005compared to sales of $2,084,000 in the prior year’s second quarter.  The Company’s loss for the quarter endedApril 30, 2005 increased to $870,000 or $.29 per share compared to $223,000 or$.08 per share in the prior year’s period. The decrease in revenues in thesecond quarter resulted from the discontinuation of sales of our older analogvision units to a large OEM customer, which accounted for approximately$620,000 of revenue in the second quarter of fiscal 2004.  Sales to other customers approximated $1.5million in the second quarter of last year. The increase in the net loss for the quarter is due in large part to the$390,000 non-recurring restructuring charge recorded in the quarter.

 

Revenues decreased 24% to$3,092,000 during the six-month period ended April 30, 2005 compared to the prioryear’s six-month period and the loss increased to $1,480,000 or $0.49 per sharecompared to a loss of $569,000 or $0.19 per share in the prior year’speriod.  Again, the decrease in revenuesin the six-month period ended April 30, 2005 resulted from the discontinuationof sales of our older analog vision units to a large OEM customer, whichaccounted for approximately $1,280,000 of revenue in the six-month period endedApril 30, 2004.  Sales to other customersapproximated $2.8 million in the six-month period of last year.

 

During the second quarter of fiscal 2005 the Companycompleted a three part corporate restructuring in aneffort to bring the Company’s cost structure into closer alignment with currentrevenues.  The first part of this planinvolved the closing of the Company’s Michigan office.  The functions of the Michigan office havebeen transferred to several of the Company’s system integration partners.  The second part of the plan involved therestructuring of the Company’s lease obligation with respect to itsheadquarters facility in Eden

 

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Prairie,Minnesota. The third part of the plan included certain other operating expensereductions which primarily consisted of an approximately 15% workforcereduction.  The Company recorded anon-recurring expense of $390,000 related to theseactions in the second quarter.  Whentaken together, the three parts of this restructuring will result in areduction of the Company’s total cost structure by over $1,200,000 per year.

 

During the fiscal 2005 second quarter, revenues fromoutside the United States accounted for 58% of revenues compared to 60% in thefiscal 2004 second quarter.  During thefirst six months of fiscal 2005, revenues from outside the United Statesaccounted for 54% compared to 63% in the first six months of fiscal 2004.

 

CRITICAL ACCOUNTINGPOLICIES AND ESTIMATES

 

Management’s discussionand analysis of its financial condition and results of operations are based onthe Company’s accompanying unaudited condensed financial statements, which havebeen prepared in accordance with accounting principles generally accepted inthe United States of America for interim financial information and with theinstructions to Form 10-QSB. Accordingly, they do not include all of the information required byaccounting principles generally accepted in United States of America forcomplete financial statements.  In theopinion of management, all adjustments (consisting of normal recurringaccruals) considered necessary for a fair presentation have been included.

 

The preparation of thesefinancial statements requires management to make certain estimates andassumptions that affect the reported amounts of assets and liabilities as ofthe date of the financial statements and the reported revenues and expensesduring the reporting period.  Managementbases its estimates on historical experience and various other assumptions thatare believed to be reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying values of assets andliabilities.  Actual results could differfrom these estimates.

 

Management believes theCompany’s critical accounting policies and areas that require more significantjudgments and estimates used in the preparation of its financial statements tobe:

 

•                  revenuerecognition and cost of revenues;

•                  estimatingvaluation allowances, specifically the allowance for doubtful accounts andinventory; and

•                  valuationand useful lives of long-lived and intangible assets.

 

### RevenueRecognition and Costs of Revenues

 

The Company typicallyrecognizes revenue on product sales upon shipment to the end user customers ifcontractual obligations have been substantially met and title and risk of losshave passed to the customer, which is generally the case for sales of 2Dmachine vision systems, spare parts and accessories.  The Company also recognizes revenue onproducts sold to distributors upon shipment because contracts with distributorsdo not include post-shipment obligations or any right of return provisions andpricing is fixed at the time of sale. Services revenue, which includes application engineering, productdevelopment,

 

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customer training andrepair services, is recognized when the services are performed.

 

Costs of revenues includethe cost of products sold and the cost of third party application engineers whoperform certain installation services at our request for customers.  Cost of revenues does not include any costsassociated with engineering services performed by PPT employees as these costsare a fixed component of our operating cost structure and an allocation of aportion of these costs to cost of revenues would be arbitrary and lead toinconsistent presentation of gross margins and operating costs.

 

# Valuation Allowances

 

Management estimates theallowance for doubtful accounts by analyzing accounts receivable balances byage and considering specific factors about the individual customer’s financialcondition.  When it is deemed probablethat all or a portion of a customer’s account is uncollectible, a correspondingamount is added to the reserve.

 

The Company’s inventoryprimarily consists of parts and other materials that are used in the manufactureof vision systems.  The Company generallyonly builds systems based on customer orders and as a result maintains only aminor amount of finished goods inventory. Management establishes valuation reserves on inventory for estimatedexcess and obsolete inventory equal to the difference between the cost ofinventory and its estimated market value based on assumptions about futureproduct demand and market conditions.  Inview of the rapid pace of technological change in the machine vision industry,the Company generally considers inventory that has had no usage for one year tobe obsolete.  In addition, changes in theCompany’s product offerings or those of the Company’s competitors, may alsoresult in excess or obsolete inventory levels. Accordingly, these factors will also be considered in the determinationof the market value of inventory.

 

# Long-Lived and IntangibleAssets

 

The Company reviews itslong-lived assets for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable.Recoverability of assets to be held and used is measured by a comparison of thecarrying amount of an asset to undiscounted future net cash flows expected tobe generated by the assets. If these assets are considered to be impaired, theimpairment to be recognized is measured by the amount by which the carryingamount of the assets exceeds the fair value of the assets.

 

RESULTS OF OPERATIONS

 

Revenues

 

Net revenues decreased25% to $1,567,000 for the three-month period ended April 30, 2005, compared tonet revenues of $2,084,000 for the same period in fiscal 2004.  For the six-month period ended April 30,2005, revenues decreased 24% to $3,092,000 from $4,060,000 for the same periodin fiscal 2004.  Unit sales of the Company’smachine vision systems decreased to 191 for the second quarter of fiscal 2005versus 204 for the same period in fiscal 2004. Unit sales for the first half of fiscal 2005 increased to 412 from 393in the first half of fiscal

 

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2004.  In the three month period ended April 30,2005, revenues from two customers represented approximately 14% and 12% oftotal revenue, respectively. In the three month period ended April 30, 2004,revenues from three customers accounted for 30%, 13%, and 10% of total revenue,respectively.  In the six month periodended April 30, 2005, revenues from two customers represented approximately 11%and 11% of total revenue, respectively. In the six month period ended April 30, 2004, revenues from one customeraccounted for 32% of total revenue.

 

The decrease in revenues in the second quarter and the six-monthperiod ended April 30, 2005 resulted from the discontinuation of sales of ourolder analog vision units to a large OEM customer, which accounted forapproximately $620,000 of revenue in the second quarter of fiscal 2004 and$1,280,000 for the six-month period ended April 30, 2004.  Sales to other customers approximated $1.5million in the second quarter of last year and $2.8 million for the six-monthperiod ended April 30, 2004.

 

During the fiscal 2005second quarter, revenues from outside the United States accounted for 58% ofrevenues compared to 60% in the fiscal 2004 second quarter.  During the first six months of fiscal 2005,revenues from outside the United States accounted for 54% compared to 63% inthe first six months of fiscal 2004.

 

Wewill continue to experience adverse quarter-over-quarter revenue comparisons aswe transition almost exclusively to product development and sales of the IMPACTfamily of products.  In addition, revenuecomparisons may be unfavorable for the third quarter as we will no longer beshipping product to the one large OEM customer who was a significant customerin each of the first three quarters of fiscal 2004.  Revenue trends may also be inconsistent giventhe nature of the machine vision industry and the capital nature of ourproduct.

 

Gross profit decreased31% to $764,000 for the three-month period ended April 30, 2005, compared to$1,114,000 for the same period in fiscal 2004. For the six-month period ended April 30, 2005, gross profit decreased23% to $1,560,000 from $2,017,000 for the same period in fiscal 2004.  As a percentage of net revenues, the grossprofit for the second quarter of fiscal 2005 decreased to 49% compared to 53%in the same period in fiscal 2004.  Forthe six-month periods ended April 30, 2004 and 2005, gross profits as apercentage of net revenues were 50%.  The gross margins this year were adverselyimpacted by the low volume, which resulted in our manufacturing overhead beingspread over a smaller number of units. We would expect to see our margins improve slightly in the remainder ofthe year as our fixed manufacturing costs have decreased due to amendment ofour facility lease.

 

Sales and marketing expenses decreased 7% to $659,000for the three-month period ended April 30, 2005 compared to $706,000 for thesame period in fiscal 2004.    For thesix-month period ended April 30, 2005, sales and marketing expenses increasedslightly to $1,345,000 from $1,340,000 for the same period in fiscal 2004.  As a percentage of net revenues, sales andmarketing expenses increased to 42% for the second quarter of fiscal 2005compared to 34% for the same period in fiscal 2004.  For the six-month period ended April 30,2005, sales and marketing expenses as a percentage of net revenues increased to43% compared to 33% in the same period in fiscal 2004.  This increase is the result of sales andmarketing expenses remaining relatively flat with a decrease in sales. TheCompany expects sales and marketing expenses in absolute dollars to decrease ona quarterly basis for the remainder of fiscal 2005 due to our second quarter

 

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restructuring actions. Increases in sales andmarketing expenditures may occur to the extent that revenue growth is achieved.

 

General and administrative expenses decreased 10% to$269,000 for the three-month period ended April 30, 2005, compared to $300,000for the same period in fiscal 2004.  Forthe six-month period ended April 30, 2005, general and administrative expensesdecreased 4% to $560,000 as compared to $582,000 in the same period in fiscal2004.  As a percentage of net revenues,general and administrative expenses increased to 17% for the second quarter offiscal 2005 versus 14% for the same period in fiscal 2004.  For the six-month period ended April 30,2004, general and administrative expenses as a percentage of net revenuesincreased to 18% from 14% in the same period in fiscal 2004.  The Company expects general andadministrative expenses on a quarterly basis to decrease from their currentlevels due to the second quarter corporate restructuring.

 

Research and development expenses decreased 19% to $336,000for the three-month period ended April 30, 2005, compared to $414,000 for thesame period in fiscal 2004. For the six-month period ended April 30, 2005,research and development expenses decreased 14% to $710,000 from $824,000 inthe same period in fiscal 2004.  As apercentage of net revenues, research and development expenses increasedslightly to 21% for the second quarter of fiscal 2005, compared to 20% for thesecond quarter of fiscal 2004.  For thesix-month period ended April 30, 2005, research and development expenses as apercentage of net revenues increased to 23% from 20% in the same period infiscal 2004.  Again, the Company expectsresearch and development expenses on a quarterly basis to decrease from theircurrent levels due to the second quarter corporate restructuring.

 

The Company did not record an income tax benefit orexpense for the three and six month periods ended April 30, 2005 or 2004.

 

TheCompany’s net loss from continuing operations for the second quarter of fiscal2005 increased from year-ago levels to $870,000 or 29 cents per share, ascompared with a loss of $304,000 or 10 cents per share for the same period infiscal 2004.  The Company’s net loss fromcontinuing operations for the six-month period ended April 30, 2005 increasedto $1,425,000 or 47 cents per share, as compared with a loss of $727,000 or 25cents per share for the same period in fiscal 2004.  There were approximately 3.0 million sharesoutstanding during the three and six month periods in fiscal 2005 and 2004.

 

Theresults of our discontinued operations resulted in no loss for the secondquarter and income of $81,000 or $0.02 per share in the second quarter offiscal 2004.  Our discontinued operationsresulted in a loss of $55,000 or $0.02 for the six-month ended April 30, 2005compared to income of $158,000 or $0.06 per share in the same period of fiscal2004.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At April 30, 2005 the Company had cash balances of$1.4 million, working capital of approximately $2.9 million and no long-termdebt.

 

In the second quarter of fiscal 2005 the Companyincurred a net loss from continuing and discontinued operations of $870,000which included non-cash charges related to depreciation and amortization of$59,000.  The net loss for the quarterincreased $647,000 from the $223,000 loss reported in the second

 

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quarter of fiscal 2004.  For the quarter ended April 30, 2004, cashused in operating activities was $781,000 and for the six-month period endedApril 30, 2005, cash used in operating activities was $1,230,000.  For the six-month period, this represents adecrease of $913,000.  The increase incash used in operations during fiscal 2005 relates to the Company’s secondquarter corporate restructuring actions. The Company finalized an agreement with its current landlord restructurethe Company’s lease obligation with respect to its headquarters facility inEden Prairie, Minnesota.  Under theamended lease terms, the Company will receive a reduction in its base rentalrates and its facility will shrink from approximately 64,000 square feet toapproximately 35,000 square feet resulting in a savings of approximately$120,000 per quarter.  In exchange forthese amended lease terms, the Company paid $140,000 for certain leaseholdimprovements associated with the reconfigured space and also paid approximately$300,000 in accrued deferred rent. The Company expects that the restructuringactions will reduce operating expenses by approximately $1.2 million annually.

 

The Company has been using its existing cash and cashequivalents to fund the cash needs of its operating activities.  We are carefully monitoring our cash positionand evaluating the need for additional capital to enable us to achieve our shortand long-term objectives.  If there was aneed for additional capital, the Company believes that other sources offinancing are available including sales of its common or preferred stock,external borrowing, customer or vendor financing, customer sponsored researchand development projects or investments by strategic partners. The avenues thatwe take to satisfy our potential capital requirements will depend in large parton the level of our revenues, and we will evaluate these alternatives as weobtain better visibility of our revenue expectations.

 

TheCompany believes that existing cash balances and available sources of capital willenable the Company to meet its operating, working capital and capitalresource obligations through the next twelve months.

 

There can be no assurance that the Companywill not incur additional losses for a longer period of time, will generatepositive cash flow from it operations, or that the Company will attain orthereafter sustain profitability in any future period.  To the extent that the Company continues toincur losses or achieves revenue growth in the future requiring an increase inworking capital, its operating and investing activities may use cash and,consequentially, such losses or growth will require the Company to obtainadditional sources of financing to provide for these cash needs.

 

As of April 30, 2005, the Company had nooutstanding debt.

 

Working capital decreased 34% to $2,910,000at April 30, 2005 from $4,438,000 at October 31, 2004.  The Company financed its operations duringthe first six months of fiscal 2005 through existing cash and cashequivalents.  Net cash used in operatingactivities during the first six months of fiscal 2005 was $1,230,000.  Accounts receivable decreased $601,000 andinventories increased $12,000 during the first six months of fiscal 2005.  Accounts payable and accrued expensesdecreased by $505,000 and $55,000, respectively.

 

Net cash used ininvesting activities was $178,000 during the six months ended April 30, 2005and related to the $140,000 leasehold improvement costs that were paid duringthe second quarter of fiscal 2005 related to the amended lease agreement of theCompany’s corporate office in Eden Prairie, Minnesota along

 

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with fixed assetadditions.  This compares with $76,000 infixed asset additions for the same period in fiscal 2004.  The Company expects that fixed assetadditions for the remaining quarters of fiscal 2005 will be approximately$30,000 for the remainder of fiscal 2005.

 

The Company does not have relationships withunconsolidated entities or financial partnerships, such as entities oftenreferred to as structured finance or special purpose entities, which would havebeen established for the purpose of facilitating off-balance sheet financialarrangements.  As such, the Company isnot materially exposed to any financing, liquidity, market or credit risk thatcould arise if we had engaged in such arrangements.

 

The Company believes it does not have materialexposure to quantitative and qualitative market risks. The carrying amountsreflected in the balance sheets of cash and cash equivalents, trade receivablesand trade payables approximate fair value at April 30, 2005 due to the shortmaturities of these instruments.

 

NEW ACCOUNTINGPRONOUNCEMENTS

 

Information regarding newaccounting pronouncements is included in the Notes to Condensed FinancialStatements.

 

FORWARD LOOKINGSTATEMENTS

 

The discussion above contains forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995,including statements regarding the Company’s expectations, beliefs, intentionsand strategies regarding the future. Forward-looking statements include, without limitation, statementsregarding the extent and timing of future revenues and expenses and customerdemand.  All forward-looking statementsincluded in this document are based on information available to the Company asof the date hereof, and the Company assumes no obligation to update any suchforward-looking statements.

 

TheCompany’s actual results are subject to risks and uncertainties and coulddiffer materially from those discussed in the forward-looking statements.  These statements are based upon the Company’sexpectations regarding a number of factors, including the Company’s ability toobtain additional working capital if necessary to support its operations,changes in worldwide general economic conditions, cyclicality of capitalspending by customers, the Company’s ability to keep pace with technologicaldevelopments and evolving industry standards, worldwide competition, and theCompany’s ability to protect its existing intellectual property from challengesfrom third parties.  A detaileddescription of the factors that could cause future results to materially differfrom the Company’s recent results or those projected in the forward-lookingstatements are contained in the section entitled “Description ofBusiness” under the caption “Important Factors Regarding Forward-Looking Statements”contained in its filing with the Securities and Exchange Commission on Form10-KSB for the year ended October 31, 2004 and other reports filed with theSecurities and Exchange Commission.

 

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Item 3: CONTROLS AND PROCEDURES

 

(a)Evaluation of Disclosure Controls and Procedures.

 

The Company’s Chief ExecutiveOfficer, Joseph C. Christenson and Chief Financial Officer, Timothy C. Claytonhave reviewed the Company’s disclosure controls and procedures as of the end ofthe period covered by this report.  Basedupon this review, the Company’s disclosure controls and procedures areeffective.

 

(b) Changes in InternalControl Over Financial Reporting.

 

There have been nochanges in internal control over financial reporting that occurred during thefiscal quarter covered by this report that have materially affected, or arereasonably likely to materially affect, the registrant’s internal control overfinancial reporting.

 

PART II.                         OTHERINFORMATION

 

Item1:                                   LEGAL PROCEEDINGS

None.

 

Item2:                                   UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS

None.

 

Item3.                                   DEFAULTS UPON SENIOR SECURITIES

NotApplicable

 

Item4:                                   SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS

The Company previouslyreported the results of its Annual Meeting of Sharheolders held on March 10,2005 in its Form 10-QSB for the quarter needed January 31, 2005, filed with theSEC on March 17, 2005

 

Item5:                                   OTHER INFORMATION

Reverse Stock Split

 

As previously reported bythe Company, on March 10, 2005 the Company’s Board of Directors approved a1-for-4 reverse split of its common stock effective as of the close of businesson March 31, 2005 and the conversion to book-entry share registration alsoeffective as of March 31, 2005.  Inconnection with the reverse split, the Board of Directors also approved anamendment to Article 4.1 of the Company’s Articles of Incorporation toproportionately reduce the number of shares of common stock authorized from20,000,000 shares to 5,000,000 shares. In connection with the conversion to book-entry share registration, theBoard of Directors approved amendments to Sections 5.01 and 5.02 of theCompany’s Bylaws on March 10, 2005 to allow for the issuance and transfer ofshares of the Company’s common stock in uncertificated form.

 

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Change in Chief FinancialOfficer

 

Timothy C. Clayton isresigning as Chief Financial Officer of the Company at the close of business onMay 31, 2005.  Joseph C. Christenson, thePresident and Chief Executive Officer of the Company will also assume theduties of Chief Financial Officer, on June 1, 2005.

 

Item6:                                     EXHIBITS

 

(a)          Thefollowing exhibits are included herein:

 

3.1                                 Articlesof Incorporation

 

3.2                               Bylaws

 

10.1                           SecondAmendment To Lease Agreement

 

31.1                           Certificationof Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of2002 (Rules 13a- 14 and 15d-14 of the Exchange Act).

 

31.2                           Certificationof Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of2002 (Rules 13a- 14 and 15d-14 of the Exchange Act).

 

32.1                           Certificationspursuant Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350).

 

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SIGNATURES

 

Pursuant to the requirementsof the Securities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned thereunto duly authorized.

 
|               | PPT VISION, INC.               |   |
|--------------------|--------------------------------|--------|
|               |                           |   |
|               |                           |   |
| Date: May 31, 2005 |                           |   |
|               |                           |   |
|               | /s/Joseph C.  Christenson      |   |
|               | Joseph C. Christenson          |   |
|               | President                      |   |
|               | (Principal Executive  Officer) |   |
|               |                           |   |
|               |                           |   |
|               | /s/Timothy C. Clayton          |   |
|               | Timothy C. Clayton             |   |
|               | Chief Financial Officer        |   |
|               | (Principal Financial  and      |   |
|               | Accounting Officer)            |   |

 

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