U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
CONFORMED COPY
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission File No. 2-67918
Mikros Systems Corporation
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 14-1598200
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
707 Alexander Road, Building Two, Suite 208, Princeton, New Jersey 08540
(Address of Principal Executive Offices)
(609) 987-1513
(Issuer's Telephone Number,
Including Area Code)
(Former Address, If Changed Since Last Report)
Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes: X No:
State the number of shares outstanding of each of the Issuer's classes of
common stock, as of March 31, 2000:
Class Number of Shares
Common Stock, Par Value $.01 29,201,463
Transitional Small Business Disclosure Format (check one):
Yes: X No:
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
BALANCE SHEETS
as of March 31, 2000 (unaudited) and
December 31, 1999 (audited) ......................................... 5
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999
(unaudited).......................................................... 7
STATEMENTS OF SHAREHOLDER'S DEFICIENCY
For the Three Months Ended March 31, 2000 (unaudited) and for the year
ended December 31, 1999 (audited)................................... 8
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999
(unaudited)........................................................... 9
NOTES TO THE FINANCIAL STATEMENTS (unaudited)...................... 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 13
Results of Operations........................................... 14
Liquidity and Capital Resources................................. 15
PART II OTHER INFORMATION
Item 5. Other Information........................................ 17
Item 6. Exhibits and Reports on Form 8-K.................. 17
SIGNATURES...................................................... 18
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the
following financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission, although Mikros Systems Corporation (the
"Company") believes that such financial disclosures are adequate to assure
that the information presented is not misleading in any material respect.
The following financial statements should be read in conjunction with year-
end financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
The results of operations for the interim periods presented herein are not
necessarily indicative of the results to be expected for the entire fiscal
year.
Lipman Selznick & Witkowski
Raritan Plaza III
101 Fieldcrest Avenue
Post Office Box 6204
Edison, New Jersey 08818-6204
732-225-8888
Independent Accountant's Report
Board of Directors
Mikros Systems Corporation
Princeton, New Jersey
We have reviewed the accompanying balance sheet of Mikros Systems Corporation
as of March 31, 2000 and the related statements of operations, shareholders'
deficiency and cash flows for the three months then ended. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to
be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency that raises substantial doubt
about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
The balance sheet as of December 31, 1999 was audited by us and we expressed
an unqualified opinion with the explanatory paragraph above related to the
going concern issue in our report dated April 7, 2000, however, we have not
performed any auditing procedures since that date.
The statements of operations and cash flows for the three month period ended
March 31, 1999 were not audited by us and, accordingly, we do not express an
opinion on them.
Lipman Selznick & Witkowski
A Professional Corporation
Edison, New Jersey
May 8, 2000
MIKROS SYSTEMS CORPORATION
BALANCE SHEETS
(UNAUDITED) (AUDITED)
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
- --------- --------- -----------
CURRENT ASSETS
Cash $ 73,341 $ 33,766
Accounts Receivable, net of
Allowances 35,141 30,000
Other Current Assets 4,558 500
-------- --------
TOTAL CURRENT ASSETS 113,040 64,266
-------- --------
EQUIPMENT 59,722 71,170
Less: Accumulated Depreciation 51,255 61,080
-------- --------
EQUIPMENT, NET 8,467 10,090
PATENT COSTS, NET 26,964 27,494
-------- --------
TOTAL ASSETS $ 148,471 $ 101,850
======== ========
See Notes to Financial Statements
MIKROS SYSTEMS CORPORATION
BALANCE SHEETS
(UNAUDITED) (AUDITED)
MARCH 31, DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' DEFICIENCY 2000 1999
--------- ------------
CURRENT LIABILITIES
Accounts Payable $ 69,347 $ 52,558
Notes Payable
Related Parties 72,500 72,500
Other 35,000 35,000
Accrued Payroll and Payroll Taxes 25,240 25,240
Accrued Expenses 9,996 164,990
Advances from related party 97,397 111,093
Unliquidated Progress Payments and Other
Customer Advances 15,000 15,000
-------- ---------
TOTAL LIABILITIES 324,480 476,381
-------- ---------
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 1999 and 1998 80,450 80,450
-------- ---------
SHAREHOLDERS' DEFICIENCY
Preferred Stock, convertible,
par value $.01 per share, authorized 2,000,000
shares, issued and outstanding 255,000 shares
in 2000 and 1999 2,550 2,550
Preferred Stock, Series B convertible, par value
$.01 per share, authorized 1,200,000 shares, issued
and outstanding 1,131,663 shares in 2000 and 1999 11,316 11,316
Preferred Stock, Series D, par value $.01 per
share, 690,000 shares authorized, issued and
outstanding in 2000 and 1999 6,900 6,900
Common Stock, par value $.01 per share,
authorized 60,000,000 shares, issued and
outstanding 29,201,463 in 2000 and
28,588,963 in 1999 292,015 285,890
Capital in excess of par 11,232,448 11,005,252
Accumulated deficit (11,801,688) (11,766,889)
----------- -----------
TOTAL SHAREHOLDERS' DEFICIENCY ( 256,459) ( 454,981)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 148,471 $ 101,850
============ ============
See Notes to Financial Statements
MIKROS SYSTEMS CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended,
March 31, 2000 March 31, 1999
-------------- --------------
Revenues:
Royalties $ 6,382 $ 5,650
----------- -----------
Total Revenues 6,382 5,650
Cost of Sales:
Contract Research and Development - 4,500
----------- -----------
Total Cost of Sales - 4,500
----------- -----------
Gross Margin 6,382 1,150
----------- -----------
Expenses:
General & Administrative 45,558 39,936
Interest - -
----------- -----------
Total Operating Expenses 45,558 39,936
----------- -----------
Operating Loss (39,176) (38,786)
Gain from disposition of asset 4,377 -
----------- -----------
Operating loss before Extraordinary
Items (34,799) (38,786)
Extraordinary Items:
Gain on the Settlement of Accounts
Payable Debt - 2,074
------------ -----------
Net Loss $ (34,799) $ (36,712)
============ ===========
Basic Loss per share $ 0.00 $ 0.00
Basic Earning per share- Extraordinary
Items 0.00 0.00
------------ -----------
Basic Loss per share $ 0.00 $ 0.00
=========== ===========
Weighted average number of
shares outstanding 28,667,479 27,590,815
============ ===========
See Notes to Financial Statements
MIKROS SYSTEMS CORPORATION
STATEMENTS OF SHAREHOLDERS' DEFICIENCY
DECEMBER 31, 1999 (AUDITED) AND MARCH 31, 2000 (UNAUDITED)
Preferred Stock Preferred Stock B Preferred Stock D
$0.01 Par Value $0.01 Par Value $0.01 Par Value
------------------------------------------------------
Number Par Number Par Number Par
of shares Value of shares Value of shares Value
-------------------------------------------------------
Balance December 31, 1998 255,000 2,550 1,131,663 11,316 690,000 6,900
Year Ended December 31, 1999:
Conversion of Secured Debt
Net Loss
------- ------ --------- ------ ------- ------
Balance December 31, 1999 255,000 2,550 1,131,663 11,316 690,000 6,900
Three Months Ended
March 31, 2000:
Conversion of Debt
Warrants and Options Exercised
Net Loss
-------- ------ --------- ------- ------- -------
Balance March 31, 2000 255,000 $2,550 1,131,663 $11,316 690,000 $ 6,900
======== ====== ========= ======= ======= =======
Capital in
Common Stock excess of Accumulated
$0.01 Par Value Par Value Deficit
--------------------------------------------
Number Par
of shares Value
-----------------------
Balance December 31, 1998 27,422,296 274,223 10,946,919 (11,489,354)
Year Ended December 31, 1999:
Conversion of Secured Debt 1,166,667 11,667 58,333
Net Loss (277,535)
---------- ------- ---------- -----------
Balance December 31, 1999 28,588,963 285,890 11,005,252 (11,766,889)
Three Months Ended
March 31, 2000:
Conversion of Debt 500,000 5,000 225,946
Warrants snd Options Exercised 112,500 1,125 1,250
Net Loss (34,799)
---------- ------- ---------- -----------
Balance March 31, 2000 29,201,463 $292,015 $11,232,448 $(11,801,688)
========== ======= ========== ===========
See Notes to Financial Statements
MIKROS SYSTEMS CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
The Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
Cash Flows Provided (Used) by Operating
Activities:
Net Loss $( 34,799) $ (36,712)
Adjustments to reconcile Net Loss
to Net Cash Provided (Used) by Operating
Activities:
Gain from Disposition of Asset (4,377) -
Settlement of Accounts Payable - (2,074)
Depreciation and Amortization 530 539
Asset Impairment - 5,000
Net Changes in Operating Assets and
Liabilities:
(Increase) Decrease in:
Accounts Receivable 23,438 6,790
Other Current Assets (4,058) (5,467)
Increase (Decrease) in:
Accounts Payable 16,788 (17,967)
Accrued Payroll and Payroll Taxes - 1,176
Other Liabilities and Accrued Expenses 32,246 (31,703)
-------- --------
Net Cash Provided (Used) by Operations 29,768 (80,418)
Cash Flows Provided by Investing Activities
Sale of Equipment 6,000 -
------- ---------
Cash Flows Provided (Used) by Financing
Activities:
Advance from Related Party 1,432 -
Proceeds from the Exercise of Warrants and
Options 2,375 -
-------- --------
Net Cash Provided by Financing
Activities: 3,807 -
-------- --------
Net Increase (Decrease) in Cash 39,575 (80,418)
Cash at Beginning of Period 33,766 100,983
-------- --------
Cash at End of Period $ 73,341 $ 20,565
========= ========
Supplemental disclosure of cash flow
information:
Cash paid during the quarter for interest $ - $ -
Supplemental disclosure of non-cash
information:
Engineering Services Utilized $ - $ 217,961
Stock Issued from Conversion of Secured
Debt $ - $ 70,000
Stock Issued from Conversion of Non-
Secured Debt $ 230,946 $ -
See Notes to Financial Statements
Note 1 - Basis of Presentation:
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.
In the opinion of the Company's management the accompanying unaudited
financial statements contain all adjustments, consisting solely of those
which are of a normal recurring nature, necessary to present fairly its
financial position as of December 31, 1999 and the results of its operations
and its cash flows for the three months ended March 31, 2000.
Interim results are not necessarily indicative of results for the full
fiscal year.
Basic loss per common share was calculated based upon the net loss available
to common stockholders divided by the weighted average number of shares of
common stock outstanding during the period.
The Company's financial statements have been prepared assuming that the
Company will be able to continue as a going concern. The Company has
sustained substantial operating losses in recent years. In addition,
the Company has used substantial amounts of working capital in its
operations. Further, at March 31, 2000 its current liabilities exceed its
current assets by $211,440. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans
and intentions on the going concern issue are discussed below. These
financial statements do not include any adjustments that would be required
if the Company were unable to continue as a going concern.
In order to continue as a going concern, the Company will need to incur
substantial expenditures to develop and market its commercial wireless
communications business.
In view of these matters, realization of a major portion of the assets in
the accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent on the Company being able to obtain
financing and/or equity capital to support further development for its
commercial wireless business and continuing operations.
Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide the opportunity to
continue as a going concern.
Note 2 - Stockholders' Equity:
MANDATORILY REDEEMABLE SERIES C PREFERRED STOCK
The Series C Preferred Stock, was issued in 1988 in order to satisfy notes
payable and other trade accounts payable pursuant to a debt restructuring.
The Series C Preferred Stock is not convertible into any other class of the
Company's stock and is subject to redemption at the Company's option at any
time and redemption is mandatory if certain events occur, such as capital
reorganizations, consolidations, mergers, or sale of all or substantially
all of the Company's assets. Upon any liquidation, dissolution or winding up of
the Company, each holder of Series C Preferred Stock will be entitled to be
paid, before any distribution or payment is made upon any other class of
stock of the Company, an amount in cash equal to the redemption price for
each share of Series C Preferred Stock held by such holder, and the holders
of Series C Preferred Stock will not be entitled to any further payment.
The redemption price per share is $16.09.
SERIES B CONVERTIBLE PREFERRED STOCK
The Series B Preferred Stock, was issued in 1988 in order to satisfy notes
payable and other trade accounts payable pursuant to a debt restructuring.
Each share of Series B Preferred Stock is convertible into three shares of
the Company's common stock at a price of $.33 per share of common stock to
be received upon conversion and entitles the holder thereof to cast three
votes on all matters to be voted on by the Company's Shareholders.
Upon any liquidation, dissolution, or winding up of the Company, each holder
of of Series B Preferred Stock will be entitled to be paid, after all
distributions of payments are made upon the Series C Preferred Stock and
before any payment is made upon the Company's Convertible Preferred Stock,
an amount in cash equal to $1.00 for each share of Series B Preferred Stock
held, and such holders will not be entitled to any further payment.
SERIES D PREFERRED STOCK
The Series D Preferred Stock was issued in 1993 in order to partially satisfy
notes payable and accrued interest thereon pursuant to a debt restructuring.
The Series D Preferred Stock provides for an annual cumulative dividend of
$.10 per share. The shares are not convertible into any other class of
stock and are subject to redemption at the Company's option at any time at
a redemption price of $1.00 per share plus all unpaid cumulative dividends.
Upon liquidation, dissolution or winding up of the Corporation, each holder
of Series D Preferred Stock will be entitled to be paid, after all
distributions or payments are made upon the Corporation's Convertible
Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock,
an amount in cash equal to the Redemption Price for each share of Series D
Preferred Stock held by such holder. The holders of Series D Preferred
Stock will not be entitled to any further payment.
The Company has neither paid nor declared dividends on its Common Stock
since its inception and does not plan to pay dividends on its Common Stock
in the foreseeable future.
The Company expects that any earnings which the Company may realize and which
are not paid as dividends to holders of Preferred Stock will be retained to
finance the growth of the Company.
Note 3 - Financing:
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 $122,500 from officers and directors).
The promissory notes were for a term of approximately eighteen months,
bearing interest at 12% on the unpaid balance, and were 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 inmaterial and no
accounting recognition was given to their issuance.
In October 1996, all of the note holders 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 inmaterial. Accordingly, no accounting recognition has
been given to this modification of terms.
During 1998, the Company paid the investors all of the interest accrued
on promissory notes payable through May 15, 1998. No additional interest
accrued after that date. At that time, the Company offered to convert the
notes at face value to stock valued at $.06 per share in order to
restructure its debt. Most of the investors elected to convert.
As a result, 8,504,177 shares of common stock were issued.
Three of the note holders (not related parties) chose not to convert
notes totalling $105,000. These are included in the notes payable
as of December 31, 1998. During 1999, two of the remaining three
note holders converted their debt, totalling $70,000, under the 1998
terms.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
Mikros Systems Corporation was founded in 1978 in Albany, New York to
exploit microprocessor technology developed at the General Electric Research
and Development Center for the military defense industry. The Company was
incorporated under the laws of the State of Delaware in 1978 and acquired all
rights of General Electric Venture Capital Corporation, a subsidiary of
General Electric Company, to certain microcomputer technology. The Company's
headquarters are located at 707 Alexander Road, Suite 208, Princeton,
New Jersey; telephone (609) 987-1513.
The knowledge base and proprietary technology developed were recognized by
the Company as applicable to the rapidly expanding wireless business in the
commercial sector. The rigorous radio transmission environment as well as
the challenges of underwater signal processing required Mikros scientists to
invent new methods for optimizing the bandwidth for a higher data throughput.
In 1995, the Company decided to also pursue commercial contracts which would
employ these advanced techniques to enhance the data transmission rates in
the AM and FM radio spectrum.
In 1996, Safeguard Scientifics (Delaware), Inc., invested $1 million in
Mikros in exchange for 10% ownership in the Company. At the same time,
Mobile Broadcasting Corporation (MBC) was created to exploit the AM radio
technology, particularly in mobile or portable platforms such as automobiles.
Initially, Safeguard invested $1 million in MBC for 75% ownership whereas
Mikros owned the remaining 25%. Mikros' share in MBC was subsequently
diluted to 18%, as a result of an additional capital investment of
$1,200,000 by Safeguard. In 1998, Mikros' share increased to 50% as a
result of the Company's investment arising from the use of its engineering
credits.
Data Design and Development Corporation (3D) was also founded in 1996 as
part of the Safeguard Scientific agreement and retains ownership of the AM
and FM technology. 3D has licensed the FM technology rights in North
America to Mikros and the AM technology rights in North America to MBC.
Mikros owns 1/3 of 3D, certain Mikros shareholders own another 1/3, and
Safeguard owns the remaining 1/3.
Mikros entered negotiations in late 1997 for the sale of its military
contracts to General Atronics Corporation (GAC). The resulting transaction
was concluded in 1998 and included a $600,000 cash payment and a 2% royalty
to be paid to the Company over four years on all data terminal set sales.
In addition, the purchaser was obligated to supply $1,000,000 in engineering
services to the Company which will continue to be expended on the AM data
program in cooperation with MBC.
Mikros' commercial business assets now consist of both the original FM
technology and the AM Radio technology. Continued development of the FM
technology has been postponed in order to direct all of the Company's
resources to the AM Radio technology.
The digital system Mikros is developing for AM radio data transmission will
allow simultaneous broadcasting of the present radio signal with a digital
signal. This will be accomplished with minimal disturbance to the existing
radio channel. This system will require a minor modification to the radio
station transmitter which is not expected to require new FCC approval since
adjacent channel interference is avoided.
The Company has completed the Alpha Phase of its development program for the
AM data broadcasting. Live on the air tests have demonstrated the Company's
ability to simultaneously broadcast a data signal along with regular audio
programming. The data are received using a prototype custom data radio that
has been developed by the Company.
The Company developed a business model during 1999. This model combines the
AM data transmission technology with the operations of a nationwide or area
wide network of AM radio stations equipped with the minor modifications to
the radio station's transmitter. Data could be broadcast from point to
multipoint and the signal received by the listener who will have a small
portable receiver to be developed based on the prototype presently being
used in the Company's experimental trials.
In addition to the AM technology developed by the Company, Mikros entered
into an Memorandum of Understanding with Lucent Digital Radio, Inc.,
a venture owned jointly by Lucent Technologies and Pequot Capital.
Mikros is seeking to license the use of patented Lucent Digital Radio AM
in band on channel technologies. The Company plans to augment its
existing AM Digital Radio technology with the Lucent Digital Radio
technologies. There is no assurance that any of the applications
presently contemplated for datacasting (assuming a network will be
established) will be embraced by potential users.
Certain matters discussed in this Form 10-QSB are "forward-looking
statements" intended to qualify for the safe harbors from liability
established by the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements include, without limitation, statements
regarding technology under development, strategies and objectives.
The forward-looking statements include risks and uncertainties, including,
but not limited to, the anticpated size of and growth in the markets
for the Company's products, the trends favoring the use of the Company's
proposed commercial products, the anticpated demand for the Company's
new products, the timing of development and implementation of the
Company's new product offerings, the utilization of such products by the
Company's clients and trends in future operating performance, and other
factors not within the Company's control. The factors discussed herein
and expressed from time to time in the Company's filings with the
Securities and Exchange Commission could cause actual results and
development to be materially different from those expressed in or implied
by such statements. The forward-looking statements made herein are only
made as of the date of this report and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
Results of Operations
- ---------------------
Three Months Ended March 31, 2000 and 1999
Total revenues were $6,382 for the first quarter ended March 31, 2000
compared to $5,650 for the same period in 1999.
The 2000 revenues represent royalties earned pursuant to the Company's
divestiture of its military contracts. The year to date royalty revenues
of $6,382 represents 100% of the Company's 2000 revenue versus $5,650 in 1999.
General and administrative expenses for the quarter ended March 31, 2000
were $45,558 versus $39,936 in the quarter ended March 31, 1999.
No interest expense was recorded during the first quarter of 2000 or during
the year 1999.
Net loss for the three months ended March 31, 2000 was $34,799 versus a
net loss of $36,712 for the same period in 1999.
Liquidity and Capital Resources
- -------------------------------
Since its inception, the Company has financed its operations through debt,
private and public offerings of equity securities and cash generated by
operations.
As of December 31, 1998, the Company could not meet its remaining principal
repayment obligations under the 1996 Financing and the 1992-93 Financing.
The Company has ceased accruing interest on its notes payable as of
May 15, 1998. Management is attempting to finalize the restructuring of its
remaining note obligations with one related party and other note holders.
A substantial portion of the Company's costs and expenses is represented by
Research and Development costs.
At March 31, 2000, the Company had cash of
$73,341. As of March 31, 2000, the Company had negative working capital of
$211,440.
Net cash provided by operating activities was approximately $30,000 which
includes changes in certain of the Company's operating assets and liabilities
and the net loss for the three months ended March 31, 2000.
Commencing April 10, 1998, for a period of four years, the Company is
receiving a royalty of 2% of all data terminal sales by General Atronics
Corporation (GAC). The royalty agreement provides for quarterly reports and
payments based on the GAC shipments and receipts during the quarter.
The royalties for the quarter ended March 31, 2000 were $2,400.
Mikros is presently seeking $5M in financing in order to implement its
business plan. There is no guarantee that the Company will be able to
obtain the necessary financing or that the application contemplated will be
embraced by potential users.
The Company intends to continue the development and marketing of its
commercial applications of its wireless communications technology both
directly and through its relationship with MBC. In order to continue such
development and marketing, the Company will be required to raise additional
funds. The Company intends to consider the sale of additional debt and
equity securities under appropriate market conditions, alliances or other
partnership agreements with entities interested in supporting the Company's
other business transactions which would generate resources sufficient to
assure continuation of the Company's operations and research programs.
There can be no assurance, assuming the Company successfully raise
additional funds or enters into business alliances, that the Company will
achieve profitability or positive cash flow. If the Company is unable to
obtain additional adequate financing or enter into such business alliances,
management will be required to sharply curtail its operations. Failure
to obtain such additional financing on terms acceptable to the Company
may materially adversely affect the Company's ability to continue as
a going concern.
Year 2000 Compliance
- --------------------
In prior years, the Company discussed the nature and progress of its plan to
become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission
critical information technology and non-information technology systems and
believes those systems successfully responded to the Year 2000 date change.
The Company is not aware of any material problems resulting from Year 2000
issues, either with its products, its internal systems, or the products
and services of third parties. The Company will continue to monitor
its mission critical computer applications and those of its suppliers
and vendors throughout the Year 2000 to ensure that any latent Year 2000
matters that may arise are addressed promptly.
PART II. OTHER INFORMATION
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description of Exhibit
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Mikros Systems Corporation
DATE: May 15, 2000 By:/s/ Thomas J. Meaney
President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 73,341
<SECURITIES> 0
<RECEIVABLES> 85,141
<ALLOWANCES> 50,000
<INVENTORY> 0
<CURRENT-ASSETS> 4,558
<PP&E> 59,722
<DEPRECIATION> 51,255
<TOTAL-ASSETS> 148,471
<CURRENT-LIABILITIES> 324,480
<BONDS> 0
80,450
20,766
<COMMON> 292,015
<OTHER-SE> (569,240)
<TOTAL-LIABILITY-AND-EQUITY> 148,471
<SALES> 6,382
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</TABLE>
