<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the quarterly period ended JUNE 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------------- -----------------
Commission file number 0-12382
PERCEPTRONICS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 95-2577731
- ------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
21010 ERWIN STREET, WOODLAND HILLS, CA 91367
--------------------------------------------
(Address of principal executive offices)
(818)884-7470
------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes ___X___ No ______
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock: $.001 par value, outstanding at July 29, 1999: 5,655,142
Transitional Small Business Disclosure Format (Check one):
Yes ______ No __X__
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INDEX
PERCEPTRONICS, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
(a) Consolidated balance sheets, Perceptronics, Inc. and subsidiary,
June 30, 1999 and March 31, 1999.
(b) Consolidated statements of operations, Perceptronics, Inc. and
subsidiary, three months ended June 30, 1999 and 1998.
(c) Consolidated statements of cash flows, Perceptronics, Inc. and
subsidiary, three months ended June 30, 1999 and 1998.
(d) Notes to consolidated financial statements.
Item 2. Management's discussion and analysis of financial condition and
results of operations.
PART II. OTHER INFORMATION
Item 2. Changes in securities.
Item 6. Exhibits and Reports on Form 8-K.
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PERCEPTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS June 30, 1999 March 31, 1999
- ------ ------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments ............................. $ 361,340 $ 150,801
Restricted cash - Note B .................................... -- 299,000
Receivables
Billed - Note C .......................................... 122,902 133,881
Unbilled - Note C ........................................ 123,970 151,580
Other receivables ........................................ 17,771 17,854
Inventory - Note D .......................................... 172,222 172,222
Precontract Costs ........................................... 268,178 176,317
Prepaid expenses ............................................ 42,870 29,337
----------- ----------
TOTAL CURRENT ASSETS ..................................... 1,109,253 1,130,992
EQUIPMENT & LEASEHOLD IMPROVEMENTS, at cost ...................... 817,963 817,963
Less accumulated depreciation and amortization .............. 757,527 747,631
----------- ----------
60,436 70,332
DEFERRED TAXES ................................................... 932,566 932,566
OTHER ASSETS ..................................................... 84,817 82,930
----------- ----------
TOTAL ASSETS ............................................. $2,187,072 $2,216,820
----------- ----------
----------- ----------
</TABLE>
See notes to consolidated financial statements
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PERCEPTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(continued)
<TABLE>
<CAPTION>
June 30, 1999 March 31, 1999
------------ ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt - Note E ................................ $ 89,734 $ 96,629
Short term debt ........................................................... 153,701 54,000
Accounts payable .......................................................... 608,147 528,442
Accrued compensation ...................................................... 149,392 148,032
Other accrued liabilities ................................................. 211,196 210,447
------------ ------------
TOTAL CURRENT LIABILITIES .............................................. 1,212,170 1,037,550
LONG TERM DEBT
Long term debt, net of current portion - (Note E) ......................... 141,500 157,654
Other long term liabilities - (Note E) .................................... 138,000 172,500
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock - par value $.001; authorized 15,000,000 shares;
5,655,142 and 5,629,930 shares issued and outstanding .................... 5,655 5,630
Additional paid-in capital ................................................ 12,683,727 12,673,643
Accumulated deficit ....................................................... (11,993,980) (11,830,157)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ............................................ 695,402 849,116
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY ............................................................ $ 2,187,072 $2,216,820
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements
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PERCEPTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1999 1998
---------------------
<S> <C> <C>
Net sales ................................................ $ 382,410 $ 832,952
Cost of sales ............................................ 318,572 501,024
----------- -----------
Gross profit ............................................. 63,838 331,928
Cost and expenses:
Selling, general and administrative ...................... 207,310 244,878
Research and development ................................. -- 6,456
----------- -----------
Operating income (loss) .................................. (143,472) 80,594
Interest expense ......................................... 20,351 77,372
----------- -----------
Income (loss) before taxes ............................... (163,823) 3,222
Income tax provision ..................................... -- --
----------- -----------
Net income (loss) ........................................ $ (163,823) $ 3,222
----------- -----------
----------- -----------
Earnings per share:
Basic:
Net income (loss) ................................ $ (0.03) $ 0.00
----------- -----------
----------- -----------
Diluted:
Net income (loss) ................................ $ (0.03) $ 0.00
----------- -----------
----------- -----------
Weighted average common and
common equivalent shares:
Basic - Note F ................................... 5,642,536 4,586,764
----------- -----------
----------- -----------
Diluted - Note F ................................. 6,480,928 4,881,821
----------- -----------
----------- -----------
</TABLE>
See notes to consolidated financial statements
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PERCEPTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended June 30,
1999 1998
-----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ......................................................... $(163,823) $ 3,222
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization .......................................... 9,896 8,692
Changes in assets and liabilities:
Receivables ............................................................ 38,672 19,913
Inventory .............................................................. -- --
Precontract costs ...................................................... (91,861) --
Prepaid expenses ....................................................... (13,533) (214,503)
Other assets (1,887) --
Accounts payable ....................................................... 79,705 (67,713)
Accrued compensation ................................................... 1,360 27,668
Advance from customers ................................................. -- 448,500
Other accrued liabilities ............................................ 749 (50,234)
---------- -----------
NET CASH PROVIDED(USED)
IN OPERATING ACTIVITIES ......................................... (140,722) 175,545
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital additions ......................................................... -- (614)
---------- -----------
NET CASH USED IN INVESTING ACTIVITIES ............................... -- (614)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options and warrants .................................... 5,109 16,000
Net proceeds - export financing ........................................... 99,701 243,769
Payment of long term debt ................................................. (23,049) (68,621)
Decrease in other long term debt .......................................... (34,500) --
Proceeds from sale of common stock ........................................ 5,000 30,000
---------- -----------
NET CASH PROVIDED IN
FINANCING ACTIVITIES ............................................ 52,261 221,148
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ............................................ (88,461) 396,079
CASH AND CASH EQUIVALENTS AT
THE BEGINNING OF THE PERIOD ..................................... 449,801 377,411
---------- -----------
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD ......................................... $ 361,340 $ 773,490
---------- -----------
---------- -----------
CASH PAID DURING THE PERIOD
Interest ................................................... $ 10,037 $ 88,641
Income taxes ............................................... $ -- $ --
</TABLE>
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PERCEPTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited consolidated financial statements have been prepared in conformity
with generally accepted accounting principles and include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
results for the interim periods presented. All such adjustments are, in the
opinion of management, of a normal recurring nature. Results for the three month
period ended June 30, 1999 are not necessarily indicative of the operating
results to be expected for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form
10-KSB for the year ended March 31, 1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE COMPANY: Perceptronics, Inc., the "Company" designs,
develops, manufactures and markets computer-based simulation systems and
software for military and commercial training and decision support.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of Perceptronics, Inc., (the "Company") and its wholly owned
subsidiary. All significant intercompany transactions and balances have been
eliminated.
BASIS OF PRESENTATION: The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. The Company has
sustained operating losses in recent years and requires substantial amounts
of working capital in its operations. At June 30,1999, current liabilities
exceed current assets by $103,000. The Company continues to have difficulty
in meeting its obligations as they become due. Payments to vendors, totaling
approximately $229,000 at June 30, 1999 are past due and certain vendors
continue to require cash in advance or on delivery terms for goods and
services. The Company's cash flow during the three month period ended June
30, 1999 was not sufficient to meet current operating requirements and the
Company continues to have difficulty making satisfactory progress toward
liquidating its past due obligations. The ability of the Company to operate
profitably and generate sufficient positive cash flows is dependent on the
award of new contracts and raising additional investment capital to fund
development of commercial software products. The Company's consolidated
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
CASH EQUIVALENTS: All highly liquid investments maturing in three months or less
when purchased are considered as cash equivalents.
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RESTRICTED CASH: Represents short term investments that have been pledged as
collateral in conjunction with letters of credit guarantees required by the
foreign contract with the Government of Egypt.
INVENTORY: Inventory is stated at cost, which is not in excess of market. Cost
is determined principally by the first-in, first-out method.
PRECONTRACT COSTS: Costs incurred in connection with contracts which have not
been signed at the balance sheet date (but where recoverability is probable) are
accounted for as precontract costs. No revenues or profits have been recognized
on these costs. At June 30, 1999 and March 31, 1999 deferred precontract costs
were $268,178 and $176,317 respectively.
EQUIPMENT AND LEASEHOLD IMPROVEMENTS: Equipment and leasehold improvements are
stated at cost. Depreciation of equipment is provided for by the straight-line
method over their estimated useful lives, which range from 3 to 5 years.
Amortization of leasehold improvements is provided for by the straight-line
method over the shorter of the useful lives or the terms of the leases.
REVENUE RECOGNITION: All sales were recorded using the percentage-of-completion
(cost to cost) method of accounting. Under this method, sales are recorded as
costs (including general and administrative expenses) are incurred, plus a
portion of the profit expected to be realized on each contract in the ratio that
costs incurred to date bear to total estimated cost at completion. General and
administrative expenses in excess of rates billed on contracts are recorded in
the period incurred. Costs related to anticipated future losses on contracts are
accrued and charged to expense in the period when the losses are identified.
INCOME TAXES: Provisions for federal and state income taxes are calculated on
reported financial statement income based on the current tax law. Such
provisions differ from the amounts currently payable because certain items of
income and expense, known as temporary differences, are recognized in different
tax periods for financial reporting purposes than for income tax purposes.
Deferred income taxes are the result of the recognition of tax benefits that
management expects to realize from the utilization of net operating loss
carryforwards. The amounts recorded are net of a valuation allowance and
represent management's estimate of the amount that is more likely than not to be
realized.
PER SHARE DATA: Per share data is based upon the weighted average number of
shares of common stock and dilutive common stock equivalents outstanding using
the treasury stock method. Refer to Note F for a reconciliation of the shares
used to compute earnings per share.
USE OF ESTIMATES: Company management has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the reported
amounts of revenues and expenses, in conformity with generally accepted
accounting principles. Actual amounts could differ from these estimates.
NOTE C - RECEIVABLES
Billed receivables at March 31, 1999 and June 30, 1999 are $133,881 and $122,902
respectively. These balances represent amounts that have been invoiced on
commercial and United States Government contracts that remain unpaid at the end
of the respective periods. The Company expects to collect all amounts within one
year.
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Unbilled receivables at March 31, 1999 and June 30, 1999 are $151,580 and
$123,970 respectively. These balances represent amounts recognized under the
percentage-of-completion method of accounting that have not been billed because
of the billing terms of the contracts.
The amount of contract retention included in unbilled receivables was $70,000 at
March 31, 1999 and at June 30, 1999.
NOTE D - INVENTORY
A summary of the components of inventory follows:
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
-------- --------
<S> <C> <C>
Raw materials and component parts ........................... $172,222 $172,222
-------- --------
$172,222 $172,222
-------- --------
-------- --------
</TABLE>
NOTE E - LONG TERM DEBT
Long-term debt included the following at June 30 and March 31, 1999:
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
---- ----
<S> <C> <C>
Note Payable - Small Business Administration, secured by
Company assets, payable in monthly installments of $782
including interest at 4% per annum, due November 2004 $ 45,360 $ 46,908
Note Payable - Bank guaranteed by Small Business
Administration, secured by Company assets, payable in
monthly installments of $4,329 including interest at
prime rate plus 2.75 percentage points, due November 2002 142,281 151,259
Note Payable - Consultant issued to resolve open accounts
payable balance. Payable in monthly installments of $4,521
including interest at 8% per annum, due April 2000 43,593 56,116
-------- --------
231,234 254,283
Current portion of long-term notes payable 89,734 96,629
-------- --------
$141,500 $157,654
-------- --------
-------- --------
</TABLE>
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<PAGE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
June 30,
<S> <C>
2000 $ 89,734
2001 51,007
2002 56,425
2003 21,562
2004 9,067
Thereafter 3,439
-----------------
$ 231,234
-----------------
-----------------
</TABLE>
NOTE F - NET INCOME PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share" which,
when adopted, will replace the current methodology for calculating and
presenting earnings per share. Under SFAS No. 128, primary earnings per share
will be replaced with a presentation of basic earnings per share and fully
diluted earnings per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share is computed similarly to fully diluted earnings per share. The statement
became effective beginning in the Company's third quarter ended December 31,
1997. A reconciliation of shares used to compute earnings per share for the
three month periods ended June 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
Quarter ended
June 30,
1999 1998
--------- ---------
<S> <C> <C>
Weighted average common shares
outstanding .............................. 5,642,536 4,586,764
Diluted stock options and warrants
based on treasury stock method ........... 838,392 295,058
--------- ---------
Diluted shares ................................ 6,480,928 4,881,821
--------- ---------
--------- ---------
</TABLE>
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<PAGE>
Item 2. Management's discussion and analysis of financial condition and results
of operations.
GENERAL
Perceptronics , Inc., (the "Company") designs, develops and manufactures
computer-based simulation systems for training and decision support. These
systems include both hardware and software. The Company's simulators are used to
train personnel in the use of various military and commercial equipment,
including weapons, vehicles and aircraft. In the decision support area, the
Company's computer software systems are used to enhance command and control
operations, for process modeling and simulation, and for management of
concurrent engineering activities in product development and manufacturing. Much
of the Company's simulator business is in the foreign defense industry where the
Company has built an international reputation. The Company is currently
developing new commercial products in the area of Internet Collaborative 3D. The
product, called IC3DTM Framework, is directed toward the rapidly growing market
for multi-person, online, collaborative interactions in 3D virtual environments
accessed over the internet. The major market applications for IC3DTM Framework
are entertainment, education, e-commerce and business communication.
The following discussion is based on the unaudited consolidated financial
statements contained elsewhere in this report. The unaudited financial
statements have been prepared in conformity with generally accepted accounting
principals, which contemplate continuation of the Company as a going concern.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classifications of the liabilities that may result from the possible
inability of the Company to continue as a going concern. See Note B of Notes to
Consolidated Financial Statements.
RESULTS OF OPERATIONS
NET SALES. Net sales for the three-month period ended June 30, 1999, decreased
by $451,000 or 54% compared to the comparable three-month period in the prior
fiscal year. Sales of training simulator systems decreased $614,000 or 99% as a
result of the completion of a contract with the Government of Egypt for TOW PGTS
simulator systems during the previous quarter ended March 31,1999. This contract
had a total contract value of $3.0 million of which $604,000 was recognized in
the three-month period ended June 30, 1998. Training simulator system sales
during the three-month period ended June 30, 1999 amounted to only $5,000
consisting of small orders for parts and maintenance. Refer to the backlog
discussion below for the importance of Egypt to future training simulator system
sales. Simulation network technology sales, which represented 99% of net sales,
increased $170,000 or 84%. This increase is the result of the U.S. Government
SBIR Phase II contract and the State of California contract that are providing
the funding for the development and commercialization of the IC3DTM Framework
network software products for on-line, multi-user applications involving complex
3D environments. Refer to the backlog discussion below for the backlog status of
these contracts at June 30, 1999.
COST OF SALES. Cost of sales for the three-month period ended June 30, 1999
decreased 36% as a result of the 54% decrease in sales discussed above. The
decrease in cost of sales is not proportional to the decrease in net sales
because of certain fixed and semi-fixed expenses. Cost of sales as a percentage
of sales during the three-month period ended June 30, 1999 was 83% compared to
60% during the three-month period ended June 30, 1998. The higher level of
simulation network technology sales, which carry lower margins than training
simulator systems sales, and the fixed and semi-fixed expenses contributed to
the higher percentage of cost of sales to net sales during the three-month
period ended June 30, 1999.
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $38,000 or 15% in the three-month period ended
June 30, 1999 compared to the comparable three-month period in the prior fiscal
year. The decrease was the result of reduced foreign marketing expenses
partially offset by higher indirect payroll expenses which could not be directly
absorbed by contracts due to the lower sales level during the three-month period
ended June 30, 1999. The Company's management continues to pursue cost reduction
measures consistent with the level of business wherever opportunities can be
identified. Effective the beginning of July actions were implemented to reduce
payroll expenses.
INTEREST EXPENSE. Interest expense decreased 74% or $57,000 in the three-month
period ended June 30, 1999 compared to the comparable three-month period in the
prior fiscal year. Interest expense decreased significantly because of the
completion of the Egypt contract and the resulting repayment of the export
credit facility during the previous quarter ended March 31, 1999.
BACKLOG. The Company's firm contract backlog was $350,000 at June 30, 1999,
compared to $3.5 million at June 30, 1998. The term "firm contract backlog"
refers to the aggregate revenue remaining under contracts held by the Company
and includes both funded and unfunded amounts. At June 30, 1999 all backlog was
funded. The backlog at June 30, 1998 included $2.1 million applicable to the
contract with the Government of Egypt for TOW PGTS training systems. The
contract with Egypt was completed during the previous quarter ended March 31,
1999 and there is no backlog on this contract remaining at June 30, 1999. The
entire June 30, 1999 backlog consists of simulation network technology
contracts. The contracts included in the backlog for the development and
commercialization of the IC3DTM Framework network software products for on-line,
multi-user applications involving complex 3D environments, $90,000, will be
completed by the end of the second quarter of fiscal 2000. Beyond that point,
the Company will require independent investment capital to fund the IC3DTM
Framework products. The Company currently has a proposal outstanding with Egypt
for a large training system contract with negotiations scheduled to start during
the second quarter of fiscal 2000. The award of this contract, while promising
is not a certainty. In the event that the Company is not successful in receiving
the award, the Company would have to significantly restructure its operations.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's unrestricted cash balances were $361,000 at June 30, 1999,
resulting primarily from the collection of the final receivable amount
applicable to the TOW PGTS contract with the Government of Egypt. The Company's
principal source of liquidity continues to be the Company's export credit
facility used to fund active foreign contracts, vendor credit and cash flow
generated from operations. The Company had negative working capital of $103,000
at June 30, 1999, compared to positive working capital of $93,000 at March 31,
1999. In the past the Company has experienced severe liquidity problems and
continues to have difficulty in meeting all of its obligations as they come due.
With respect to foreign contracts for TOW PGTS simulator systems, an export
credit facility, which has been guaranteed by the U.S. Small Business
Administration (SBA) and the California Export Finance Office (CEFO), has been
available to provide the cash flow required to perform on foreign contracts.
During the three-month period ended June 30, 1999, there were no active
contracts for TOW PGTS simulator systems and there was no backlog for these
contracts at June 30, 1999. In the event of a TOW PGTS simulator system contract
award, the Company is confident that an export credit facility will be available
to provide working capital to perform on the contract. At June 30, 1999, vendor
accounts totaling $229,000 are past due and are being liquidated as positive
cash flow permits. The Company had been making good progress in reducing this
balance, however the current reduced level of backlog and net sales will
restrict the Company's ability to adequately reduce the past due balances
further. The lack of sufficient working capital continues to restrict the
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Company's ability to expand its revenue base. See Note B of the Notes to
Consolidated Financial Statements, which is hereby incorporated herein by
reference.
The Company's short-term strategy is to increase its domestic and foreign
defense contract revenue base in order to generate sufficient cash flow from
operations and to reduce current liabilities. A major part of the Company's
long-term strategy will be to focus on the development of commercial products
derived from the Company's defense related technology and expertise in order to
reduce the Company's dependence on defense contracts. The SBIR Phase II software
contract and the California Technology Investment Partnership contract provided
funding that has enabled the Company to use it's defense related technology to
develop commercial software products associated with IC3DTM Framework. At June
30, 1999, the backlog available under the SBIR software contract is $90,000 and
there is no backlog remaining under California Technology Investment Partnership
contract. The Company is currently seeking private investment funding to support
the continued development of it's commercial IC3DTM Framework products. The
Company's ability to pursue its long-term strategy will depend on generating
sufficient cash flow from independent equity investments and from operations to
finance the new product development and market introduction. There can be no
assurance that this strategy will be successful. The Company is exploring
alternative sources for financing as well as potential business combinations in
order to meet the short and long-term objectives.
The Company currently has a $200,000 note payable with a bank that is guaranteed
by the SBA. At June 30,1999, the principal balance outstanding was $142,000. The
note bears interest at prime rate plus 2.75 percentage points with principal and
interest payable monthly amortizing over five years. The Company also has a
24-month note payable with a starting principal of $100,000 that bears interest
at 8% per annum. At June 30,1999, the outstanding balance on this note payable
was $44,000.
The Company's operating activities used cash of $141,000 during the three-month
period ended June 30, 1999 resulting from the loss incurred during the period
due to the reduced sales level.
The Company's investing activities did not use cash during the three-month
period ended June 30, 1999 because there were no capital expenditures.
The Company's financing activities provided cash of $52,000 during the
three-month period ended June 30, 1999. Proceeds from a short-term note of
$100,000 plus proceeds from the exercise of stock options and the purchase of
common stock of $10,000 was offset by the repayment of long-term debt and the
reduction of other long-term liabilities of $58,000.
YEAR 2000 COMPLIANCE
The year 2000 issue results from computer programs that do not differentiate
between the year 1900 and the year 2000 because they were written using two
digits rather than four to define the applicable year; accordingly computer
systems that have time-sensitive calculations may not properly recognize the
year 2000. The Company has conducted an initial review of its computer system to
identify whether the system is year 2000 compliant. The computer equipment and
software currently used by the Company is an older generation and will be
effected by the year 2000 problem. The Company has purchased a current
generation system and is in the process of replacing the existing computer
system. The implementation of the new system is in process and will be completed
in several months. However, there can be no assurance that software
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<PAGE>
incompatibility with the year 2000 issue on the part of the Company's customers
and suppliers will not cause an interruption of operations or that the Company
will not have to incur substantial cost to avoid such occurrences.
FORWARD LOOKING STATEMENTS
The Company hereby incorporates by reference "Forward Looking Statements"
contained in the "Management's Discussion And Analysis Of Financial Condition
And Results Of Operations" of the Company's Form 10-KSB dated March 31, 1999.
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<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in securities
During the three month period ended June 30, 1999, the Company issued
11,112 shares of common stock for a purchase price of $5,000 in
conjunction with a stock purchase subscription agreement dated in June
1998. The subscription agreement also provided for the issuance of a
warrant to the investor for the purchase of up to 11,112 shares of
common stock at an exercise price of $.75. The common shares and
warrants are not registered under the Securities Act in reliance on
section 4 (2) thereof.
Item 6. Exhibits and reports on Form 8-K
(a) The following exhibits are filed herewith:
23.1 Consent of Independent Accountants
27 Financial Data Schedules.
(b) The Registrant filed no reports on Form 8-K during the quarter ended
June 30, 1999.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERCEPTRONICS, INC.
--------------------------
Registrant
Date: AUGUST 16, 1999 /s/ Robert E. Anderson
--------------------- --------------------------
Robert E. Anderson
Senior Vice President and
Chief Financial Officer
(Principal Financial & Accounting
Officer)
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<PAGE>
INDEX TO EXHIBITS
23.1 Consent of Independent Accountants
27 Financial Data Schedules - on Edgar filing only.
17 of 17
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[LETTERHEAD LOGO]
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 2-94761, 33-7976, 33-30214, 33-41725, and 33-68588) of
Perceptronics, Inc. of our report dated June 3, 1999 with respect to the
consolidated financial statements of Perceptronics, Inc. included in the
Annual Report (form 10-KSB) for the year ended March 31, 1999.
/s/ Beckman Kirkland & Whitney
- ------------------------------
Beckman Kirkland & Whitney
Los Angeles, California
August 4, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 361,340
<SECURITIES> 0
<RECEIVABLES> 264,643
<ALLOWANCES> 0
<INVENTORY> 172,222
<CURRENT-ASSETS> 1,109,253
<PP&E> 817,963
<DEPRECIATION> 757,527
<TOTAL-ASSETS> 2,187,072
<CURRENT-LIABILITIES> 1,212,170
<BONDS> 141,500
0
0
<COMMON> 5,655
<OTHER-SE> 689,747
<TOTAL-LIABILITY-AND-EQUITY> 2,187,072
<SALES> 382,410
<TOTAL-REVENUES> 382,410
<CGS> 318,572
<TOTAL-COSTS> 525,882
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,351
<INCOME-PRETAX> (163,823)
<INCOME-TAX> 0
<INCOME-CONTINUING> (163,823)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,823)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
