SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: June 30, 1997 COMMISSION FILE #: 2-67918-NY
MIKROS SYSTEMS CORPORATION
--------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 14-1598-200
-------- -----------
(State or Other Jurisdiction of (I.R.S. Employer Identification#)
Incorporation or Organization)
3490 U.S. Route 1, Princeton, NJ 08540
--------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
Registrant's Telephone Number, Including Area Code: 609-987-1513
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. [X]Yes [ ]No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS June 30, 1997
- ---------------------------- ----------------
COMMON STOCK, PAR VALUE $.01 12,671,952 SHARES
CONVERTIBLE PREFERRED STOCK, 655,000 SHARES
PAR VALUE $.01
SERIES B PREFERRED STOCK 1,131,663 SHARES
PAR VALUE $.01
SERIES C PREFERRED STOCK 5,000 SHARES
PAR VALUE $.01
SERIES D PREFERRED STOCK 690,000 SHARES
PAR VALUE $.01
- --------------------------------------------------------------------
<PAGE>
MIKROS SYSTEMS CORPORATION
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page #
ITEM I - FINANCIAL STATEMENTS
Balance Sheets at June 30, 1997 and December 31, 1996
(Unaudited)................................................. 1
Statements of Operations for the Three Months and Six Months Ended
June 30, 1997 and 1996 (Unaudited) ........................ 3
Statements of Shareholders' Equity for the Years ended
1995 and 1996 and Six Months Ended June 30, 1997
(Unaudited)................................................. 4
Statements of Cash Flows for the Three Months and Six Months Ended
June 30, 1997 and 1996 (Unaudited)......................... 5
Notes to the Financial Statements........................... 6
ITEM II
Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 10
PART II - OTHER INFORMATION.................................... 12
<PAGE>
MIKROS SYSTEMS CORPORATION
BALANCE SHEETS
(UNAUDITED)
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
- ------------------------------ ------------ ------------
CURRENT ASSETS
Cash $ 82,364 $ 395,120
Accounts Receivable
Government 453,366 441,826
Trade 273,774 198,298
Inventories 309,787 153,192
Other Current Assets 20,976 16,508
------------ ------------
TOTAL CURRENT ASSETS 1,140,267 1,204,944
------------ ------------
FIXED ASSETS
Equipment 766,528 679,060
Furniture and Fixtures 59,207 59,207
Leasehold Improvements 8,396 3,408
------------ ------------
834,131 741,675
Less: Accumulated Depreciation
and Amortization (576,113) (535,547)
------------ ------------
FIXED ASSETS, NET 258,018 206,128
------------ ------------
OTHER ASSETS:
Unbilled Receivables 47,788 52,612
Patent Costs, Net 15,197 15,785
Other Assets 24,534 17,825
------------ ------------
TOTAL OTHER ASSETS 87,519 86,222
------------ ------------
TOTAL ASSETS $1,485,804 $1,497,294
============ ============
See Notes to Financial Statements
<PAGE>
MIKROS SYSTEMS CORPORATION
BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND JUNE 30, DECEMBER 31,
SHAREHOLDERS' EQUITY (DEFICIENCY) 1997 1996
- ------------------------------------------ ----------- ------------
CURRENT LIABILITIES
Accounts Payable $ 520,751 $ 507,249
Notes Payable
Bank 9,271 9,271
Related Parties 365,000 20,000
Other 311,000 18,302
Obligations under Capital Leases 24,997 29,492
Accrued Payroll and Payroll Taxes 38,437 50,922
Accrued Interest 3,079 3,866
Accrued Vacations 71,779 55,285
Accrued Expenses 109,650 128,743
Unliquidated Progress Payments and Other
Customer Advances 764,466 507,471
------------ ------------
TOTAL CURRENT LIABILITIES 2,218,431 1,330,601
------------ ------------
NOTES PAYABLE
Bank 5,367 10,017
Related Parties 162,500 527,500
Others 155,500 446,500
OBLIGATIONS UNDER CAPITAL LEASES-NONCURRENT 2,126 15,585
------------ ------------
TOTAL LIABILITIES 2,543,924 2,330,203
------------ ------------
COMMITMENTS AND CONTINGENCIES
MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
par value $.01 per share, authorized 150,000
shares, issued and outstanding 5,000 shares
in 1997 and 1996 80,450 80,450
------------ ------------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Common Stock, par value $.01 per share,
authorized 25,000,000 shares, issued and
outstanding 12,671,952 shares in 1997 and
11,846,952 in 1996 126,720 118,470
Preferred Stock, convertible,
par value $.01 per share, authorized 2,000,000
shares, issued and outstanding 655,000 shares
in 1997 and 1,005,000 in 1996. 6,550 10,050
Preferred Stock, Series B convertible, par value
$.01 per share, authorized 1,200,000 shares, issued
and outstanding 1,131,663 shares in 1997 and 1996 11,316 11,316
Preferred Stock, Series D, par value $.01 per share
690,000 shares authorized, issued and outstanding in
1997 and 1996 6,900 6,900
Capital in excess of par 10,244,454 10,218,548
Accumulated deficit (11,534,510) (11,278,643)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY) (1,138,570) (913,359)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,485,804 $1,497,294
============ ============
See Notes to Financial Statements
<PAGE>
MIKROS SYSTEMS CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended, Six Months Ended,
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
<C> <C> <C> <C>
Revenues:
Equipment Sales $ 612,661 $ 54,130 $ 998,065 $ 90,125
Contract Research and Development 594,279 212,446 784,563
320,126
----------- ---------- ---------- -----------
Total Revenues 1,206,940 266,576 1,782,628 410,251
----------- ---------- ---------- -----------
Cost of Sales:
Equipment Sales 511,955 4,000 809,669 36,312
Contract Research and Development 365,234 297,926 491,523
535,665
----------- ---------- ---------- -----------
Total Cost of Sales 877,189 301,926 1,301,192 571,977
----------- ---------- ---------- -----------
Gross Margin 329,751 (35,350) (481,436) (161,726)
----------- ---------- ---------- -----------
Expenses:
Research & Development 16,810 57,210 125,819 119,697
Selling, General and Administrative 286,859 199,843 543,126
397,796
Interest 35,814 30,354 68,358 47,272
----------- ---------- ---------- -----------
Total Operating Expenses 339,483 287,407 737,303
564,765
----------- ---------- ---------- -----------
Net Income (Loss) ($9,732) ($322,757) ($255,867) ($726,491)
=========== ========== ==========
===========
Net (Loss) per common share ($0.00) ($0.04) ($0.02) ($0.10)
=========== ========== ==========
===========
Weighted average number of
shares outstanding 12,265,910 7,630,858 12,265,910
7,537,941
=========== =========== ==========
===========
</TABLE>
See Notes to Financial Statements
<TABLE>
<PAGE>
MIKROS SYSTEMS CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
(UNAUDITED)
Common Preferred Preferred
Stock Stock Stock B
$.01 PAR $.01 PAR $.01 PAR
VALUE VALUE VALUE
--------- ------- --------- -------- --------- --------
PAR PAR PAR
SHARES VALUE SHARES VALUE SHARES VALUE
--------- ------- --------- -------- --------- --------
<C> <C> <C> <C> <C> <C>
Balance-December 31, 1994 7,152,108 $71,521 1,005,000 $10,050 1,131,663
$11,316
Year ended December 31, 1995:
Issuance of Common Stock 200,000 2,000
Net Loss
--------- ------- --------- -------- --------- --------
Balance December 31, 1995 7,352,108 73,521 1,005,000 10,050 1,131,663
11,316
Year Ended December 31, 1996:
Issuance of Common Stock 2,582,844 25,829
Sale of Common Stock 1,912,000 19,120
Net Loss
--------- ------- --------- -------- --------- --------
Balance-December 31, 1996 11,846,952 118,470 1,005,000 10,050 1,131,663
11,316
Six Months Ended
June 30, 1997
Issuance of Common Stock 475,000 4,750
Conversion of Preferred Stock 350,000 3,500 (350,000) (3,500)
Net Loss
--------- ------- --------- -------- --------- --------
Balance June 30, 1997 12,671,952 $126,720 655,000 $ 6,550 1,131,663
$11,316
========= ======= ========= ======= =========
========
Preferred
Stock D Capital
$.01 PAR in excess Accumulated
VALUE of Par Deficit
--------- ------- --------- -----------
PAR
SHARES VALUE
--------- ------- --------- -----------
<C> <C> <C> <C>
Balance-December 31, 1994 690,000 $ 6,900 $9,237,864 ($9,183,329)
Year ended December 31, 1995:
Issuance of Common Stock 10,500
Net Loss (647,673)
--------- ------- ---------- ------------
Balance December 31, 1995 690,000 6,900 9,248,364 ( 9,831,002)
Year Ended December 31, 1996:
Issuance of Common Stock 29,304
Sale of Common Stock 940,880
Net Loss ( 1,447,641)
--------- ------- ---------- ------------
Balance-December 31, 1996 690,000 6,900 10,218,548 (11,278,643)
Six Months Ended
June 30, 1997
Issuance of Common Stock 25,906
Net Loss (255,867)
--------- ------- ---------- ------------
Balance March 31, 1997 690,000 $ 6,900 $10,244,454 ($11,534,510)
========= ======= ========== ============
</TABLE>
See Notes to Financial Statements
<TABLE>
<PAGE>
MIKROS SYSTEMS CORPORATION
STATEMENTS OF CASH FLOW
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, 1997 June 30, 1996 June 30, 1997 June 30,
1996
-------------- -------------- ------------- -------------
<C> <C> <C> <C>
Cash Flows Provided (Used) by Operating
Activities:
Net Loss ($9,732) ($286,280) ($255,867) ($690,014)
Adjustments to reconcile Net Income (Loss)
to Net Cash Provided (Used) by Operating
Activities:
Depreciation and Amortization 20,736 15,704 41,154 31,408
Net Changes in Operating Assets and
Liabilities:
(Increase) Decrease in:
Accounts Receivable (128,110) (195,354) (87,016)
(126,140)
Unbilled Receivables 0 (16,208) 4,824 (16,526)
Inventories (122,598) 40,154 (156,595) 342
Other Current Assets 400 (11,291) (4,468) (16,201)
Other Assets (4,719) 375 (6,708) 575
Increase (Decrease) in:
Accounts Payable 8,214 (10,966) 13,502 73
Accrued Payroll and Payroll Taxes (10,068) 1,630 (12,485)
21,248
Unliquidated Progress Billings and
Other Customer Advances 114,902 (20,982) 256,995
100,000
Other Liabilities and Interest (86,399) 98,994 (3,386) 76,980
--------- --------- -------- -------
Net Cash Provided (Used) by Operations (217,374) (384,224) (210,050)
(618,255)
--------- --------- --------- --------
Cash Flows Provided (Used) by Investing
Activities:
Fixed Asset Purchases (22,509) (50,115) (92,456)
(50,115)
Patents 0 (2,109) 0 (2,109)
--------- --------- --------- --------
Net Cash (Used) by Investing Activities: (22,509) (52,224) (92,456)
(52,224)
Cash Flows Provided (Used) by Financing
Activities:
Proceeds from Loans 0 402,500 0 640,500
Proceeds from Exercise of Options
And Warrants 14,844 5,275 30,656 5,650
Repayment of Debt and Capital Leases (15,596) (3,325) (40,906)
(4,875)
--------- --------- ---------- --------
Net Cash Provided (Used) by Financing
Activities: (752) 404,450 (10,250) 641,275
--------- --------- ---------- --------
Net Increase (Decrease) in Cash (240,635) (31,998) (312,756)
(29,204)
Cash at Beginning of Period 322,999 80,070 395,120 77,276
--------- --------- --------- --------
Cash at End of Period $ 82,364 $ 48,072 $ 82,364 $ 48,072
========= ========= ======== ========
Supplemental disclosure of cash flow
information:
Cash paid during the quarter for interest $ 32,028 $ 28,846 $ 63,589 $
55,907
========= ========= ======== ========
See Notes to Financial Statements
</TABLE>
<PAGE>
MIKROS SYSTEMS CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
- ------------------------------
As permitted by rules of the Securities and Exchange Commission applicable to
quarterly reports on Form 10-Q, these notes are condensed and do not contain
all disclosures required by generally accepted accounting principles.
Reference should be made to the financial statements and related notes
included in the Company's 1996 Annual Report on Form 10-K.
In the opinion of the management of Mikros Systems Corporation, the
accompanying financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the Company's financial
position at June 30, 1997, the changes in deficiency in assets, and the
results of operations, and cash flows for the three-month and six month
periods ended June 30, 1997 and 1996.
The results disclosed in the Statements of Operations for the three and six
months ended June 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
NOTE B - NOTES AND LOANS PAYABLE
- --------------------------------
1) Outstanding Debt is summarized as follows:
06/30/97 12/31/96
-------- --------
Notes Payable to Banks $ 14,638 $ 19,288
Other Notes Payable 466,500 464,802
Related Parties 527,500 547,500
-------- --------
$1,008,638 $1,031,590
========== ==========
2) Financing Transactions
- --------------------------
1996 Financing
- --------------
In a series of transactions from February through May 1996, the Company issued
secured promissory notes and warrants to raise an aggregate of $641,500
(including $131,250 from officers and directors).
The promissory notes are for a term of approximately eighteen months, bear
interest at 12% on the unpaid balance, and are secured by certain assets of
the Company. In addition, the Company issued warrants to purchase five (5)
shares of Common Stock at $0.01 per share for each dollar of debt. The value
of the warrants was immaterial and no accounting recognition was given to
their issuance.
In October 1996 all of the noteholders of the 1996 and the 1992-93 financings
agreed to a deferral of principal payments in exchange for the right to
convert outstanding debt to Common Stock of the Company at a rate of one (1)
share of stock for $1.00 of debt. The Company determined that the fair value
of the conversion feature was immaterial. Accordingly, no accounting
recognition has been given to this modification of terms.
Safeguard Scientifics (Delaware) Inc. (SSI)
- ------------------------------------------------------------
On November 15, 1996, the Company, all of its secured creditors from its 1996
and 1992-93 financings and SSI entered into an agreement. Under the agreement
SSI paid $1,000,000 to the Company.
- - SSI received: 1) 1,912,000 shares of Common Stock of the Company; 2) a
warrant to purchase 2,388,000 shares of Common Stock at $0.65 per share;
3) a warrant to purchase 3,071,000 shares at $0.78 per share; 4) a 75%
interest in an exclusive, royalty-free, perpetual license of the AM
technology in the United States, Canada and Mexico (through SSI's
ownership in MBC); and 5) a 33 1/3% interest in the FM and AM technology
(through SSI's ownership in 3D). This transaction is more fully
described below.
- - Two (2) new companies were formed, Data Design and Development
Corporation (3D) and Mobile Broadcasting Corporation (MBC). The Company
received one-third of 3D in exchange for certain of its AM and FM
technology. SSI received one-third of 3D in exchange for a commitment
to invest up to $1,000,000 in MBC. The secured creditors received
one-third of 3D and released their security interest in the technology
transferred. The Company received 25% of MBC for $50. SSI received 75%
of MBC for $200,000.
- - 3D granted MBC an exclusive, royalty-free, perpetual license to the AM
technology in the United States, Canada and Mexico. 3D granted the
Company an exclusive, royalty-free, perpetual license to the FM
technology in the United States, Canada and Mexico. 3D retained rights
to the AM and FM technology in the rest of the world. The Company and
MBC entered into a consulting arrangement under which the Company will
be paid for the development of the AM technology. 3D will own the
rights to such technology.
The Company is unable to assign fair values to these transactions. No amount
of cash consideration was considered attributable to a sale of the AM or FM
technology or to the license thereto. No gain was recognized on the transfer
of the technology. The entire amount of the cash consideration received from
SSI was recorded as a sale of Common Stock.
In connection with the sale of the Common Stock and the Warrants, the Company
granted to SSI certain piggyback and demand registration rights with respect
to the Common Stock and the Common Stock underlying the Warrants. In
addition, the Company granted to SSI a right of first refusal pursuant to
which, subject to certain conditions, in the event the Company issues,
sells or exchanges any securities, it must first offer such securities to SSI
and such offer must remain open and irrevocable for 30 days. Such right of
first refusal may only be waived in writing and terminates at such time as SSI
owns less than 10% of the Common Stock.
<PAGE>
Pursuant to the Purchase Agreement, as long as SSI owns 1% or more of the
Company's outstanding equity securities, on a fully-diluted basis, the Company
is obligated to, among other things: (I) maintain key man life insurance on
certain key employees of the Company, of which the Company is in the process
of obtaining such insurance; (ii) permit SSI to inspect the operations and
business of the Company; and (iii) fix and maintain the number of Directors on
the Board of Directors at eight members. In addition, the Purchase Agreement
also provides that as long as SSI owns such 1%, the Company is subject to
certain negative covenants, including, among other things, restrictions on:
(I) transactions with affiliates of the Company; (ii) certain indebtedness;
and (iii) amendments to the Company's Certificate of Incorporation and Bylaws.
In connection with the transaction, the Company entered into a voting
agreement pursuant to which each of Joseph R. Burns, Thomas J. Meaney, Wayne
E. Meyer, Frederick C. Tecce and John B. Torkelsen, each a director of the
Company (collectively, the "Management Shareholders"), agreed to vote an
aggregate of approximately 6,659,214 votes for the election of two designees
of SSI to the Board of Directors of the Company.
1992-93 Financing
- -----------------
In a series of transactions consummated on October 27, 1992 and April 27,
1993, Joseph R. Burns, Thomas J. Meaney, Wayne E. Meyer, Frederick C. Tecce,
and John B. Torkelsen, individually and not as a group, (collectively referred
to herein as the "Investors") acquired certain loan and equity interests in
the Company from other debt and equity holders.
Pursuant to such transactions, each of the Investors acquired, in
consideration of an aggregate of $250,000 (each of the Investors individually
paying $50,000 in cash), twenty percent of (I) 50,000 shares of Common Stock,
$.01 par value ("Common Stock"), of the Company (ii) promissory notes of the
Company in the aggregate principal amount of $916,875 (collectively, the
"Investor Notes), (iii) warrants ("Series C Warrants") to purchase 97,500
shares of Series C Preferred Stock, $.01 par value, of the Company and (iv)
certain loan and equity rights in the Company, including without limitation,
rights under loan agreements, an investment agreement, a note purchase
agreement, and all documents related to such agreements.
Pursuant to such loan documents, among other things, the Company is prohibited
from paying dividends on its Common Stock, the Company has granted to the
Investors a security interest in all of the assets of the Company and the
Investors have the right to designate 2/7ths of the Board of Directors of the
Company, which right has not been exercised. Each of Messrs. Burns, Meaney,
Meyer and Torkelsen is a Director of the Company.
In December 1993, the Investors agreed to reduce the amounts owed by the
Company under the Investor Notes, including unpaid interest, in exchange for
shares of Common Stock and Preferred Stock issued by the Company. In return
for a reduction in debt of $416,875 and accrued interest of $273,125, the
Company issued 2,750,000 shares of Common Stock and 690,000 shares of Series D
Preferred Stock which provides for an annual cumulative dividend of $.10 per
share. The Investor Notes were modified to provide for principal payments in
sixteen quarterly installments beginning January 1, 1994 and ending on October
1, 1997.
Interest on the unpaid principal balance is due in quarterly installments
beginning on March 31, 1994. As additional consideration for the modification
of such loans, the Company extended the exercise period for the Series C
Warrants until April 25, 1999. As of December 31, 1996, the Company was in
arrears on six quarterly principal payments. In October 1996, the Investors
authorized deferral of the remaining $312,500 of principal payments until 1998
(See Note D).
NOTE C - INVENTORIES
- --------------------
Inventories at June 30, 1997 are stated at the lower of cost or market,
computed on the first-in, first-out method.
NOTE D - RECLASSIFICATION
- -------------------------
Certain prior year amounts have been reclassified to conform with the 1997
presentation.
<PAGE>
Part I. Item II.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUE
- -------
Total revenues were $1,206,940 for the quarter ended June 30, 1997 compared to
$266,576 for the same period in 1996 an increase of 452.7%. For the six
months ended June 30, 1997 revenues were $1,782,628 compared to $410,251 for
the same period in 1996, an increase of 434.5%. For the quarter and six
months ended June 30, 1997, equipment revenue was $612,661 and $998,065,
respectively, as compared to $54,130 and $90,125 for the same periods in 1996.
These increases are due to revenue from shipments in 1997 to the U.S. Navy of
AN/USQ-120 data terminal sets. Contract research and development revenues
were $594,279 and $784,563 for the quarter and six months ended June 30, 1997
compared to $212,446 and $320,126, respectively for the same periods in 1996.
These increases are due mainly to higher activity on commercial contracts in
1997 than in 1996.
COST OF SALES
- -------------
Equipment cost of sales for the three months ended June 30, 1997 and June 30,
1996 was $511,955 and $4,000, respectively. For the six months ended June 30,
1997 and June 30, 1996, such cost was $809,669 and $36,312, respectively.
Contract research and development cost of sales for the three and six months
ended June 30, 1997 was $365,234 and $491,523, respectively. For the same
periods in 1996, such costs were $297,926 and $535,665, respectively. As a
percentage of sales, cost of sales in 1996 was higher than in 1997 primarily
because of unabsorbed fixed overhead costs in 1996 due to low revenue volume.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, General & Administrative expenses were $286,859 for the quarter ended
June 30, 1997 compared to $199,843 for the same quarter in 1996 due mainly to
higher legal and travel expenses.
For the six-month periods in 1997 and 1996, such expenses were $543,126 and
$397,796, respectively.
INTEREST EXPENSE
- ----------------
Interest expenses was $35,814 versus $30,354 for the quarters ended June 30,
1997 and 1996,respectively. For the six months ended June 30, 1997 and June
30, 1996, interest expense was $68,358 and $47,272, respectively. The higher
amounts in 1997 are due to higher notes payable than in 1996.
NET LOSS
- -----------------
Net loss for the quarter ended June 30, 1997 was $9,732 versus $322,757 for
the same quarter in 1996. For the six months ended June 30, 1997 and 1996,
net loss was $255,867 and $726,491, respectively. The lower losses are due to
higher revenues in 1997 than in 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's financial statements for the quarter ended June 30, 1997 have
been prepared on a going concern basis which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course
of business.
The Company incurred a net loss of $9,732 for the quarter ended June 30,
1997, and as of June 30, 1997 had an accumulated deficit of $11,534,510. At
June 30, 1997 the Company had negative working capital of $1,078,164 compared
to negative working capital of $125,657 at December 31, 1996. For the quarter
ended June 30, 1997 the Company used $217,374 for operating activities.
For the same period in 1996, the Company used $210,050. The Company expects
to continue to incur substantial expenditures to expand its commercial
wireless communications business and has formed a strategic alliance with
Safeguard Scientifics (Delaware), Inc, as well as entered into a consulting
services agreement with Mobile Broadcasting Corporation (see 1996 Financing).
In 1996, the Company completed a debt financing of $641,500 (see 1996
Financing). In addition, the Company will consider the sale of additional
equity securities under appropriate market conditions, alliances or other
partnership agreements with entities interested in supporting the Company's
commercial and military programs, or other business transactions which would
generate resources sufficient to assure continuation of the Company's
operations and research programs. At June 30, 1997 notes payable included
$954,000 to creditors who have authorized deferral to 1998 of any principal
repayment.
<PAGE>
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits. None.
b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mikros Systems Corporation
(Registrant)
Dated: August 14, 1997 /s/ Joseph R. Benek
Joseph R. Benek
Vice President, Finance
and Chief Accounting Officer
[PREFERRED-MANDATORY] 80,450
[PREFERRED] 24,766
[COMMON] 126,720
[OTHER-SE] (1,290,056)
[TOTAL-LIABILITY-AND-EQUITY] 1,485,804
[SALES] 1,782,628
[TOTAL-REVENUES] 1,782,628
[CGS] 1,301,192
[TOTAL-COSTS] 1,301,192
[OTHER-EXPENSES] 668,945
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 68,358
[INCOME-PRETAX] (255,867)
[INCOME-TAX] 0
[INCOME-CONTINUING] (255,867)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (255,867)
[EPS-PRIMARY] (.02)
[EPS-DILUTED] (.02)
