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Previous: GIBSON GREETINGS INC, 10-Q, 1998-11-16 |
Next: EQUITY INCOME FUND FIRST EXCHANGE SERIES AT&T SHARES, 10-Q, 1998-11-16 |
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission File Number 0-11057
VICON FIBER OPTICS CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 13-2615925
(State of Incorporation) (IRS Employer Identification No.)
90 Secor Lane, Pelham Manor, NY 10803
(Address of principal executive offices)
Issuer's telephone number (914)-738-5006
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 [ ]
The number of shares outstanding of each of the issuers classes of common
equity, as the latest practicable date is:
Common Stock, $.01 per value 8,679,069 Shares outstanding at
September 30, 1998
<PAGE>
PART I
ITEM 1
VICON FIBER OPTICS CORP.
FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1998
<PAGE>
VICON FIBER OPTICS CORP.
TABLE OF CONTENTS
SEPTEMBER 30, 1998
<TABLE>
<CAPTION> <CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C>
Item 1. Financial Statements
Balance Sheets as of September 30, 1998 1-2
and December 31, 1997
Statements of Operations For the Three and 3
Nine Months Ended September 30, 1998 and 1997
Statements of Cash Flows For the Nine Months 4
Ended September 30, 1998 and 1997
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis 6
of Financial Condition and Results of Operations
PART II
Item 1-5 not applicable, Item 6 7
</TABLE>
<PAGE>
VICON FIBER OPTICS CORP.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION> <CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $110,397 $834,169
Accounts receivable - net of allowance 953,260 980,083
for uncollectible accounts
Inventories (Note 2) 1,422,029 1,276,524
Prepaid expenses and other current 11,311 19,034
assets
Deferred income taxes 32,414 34,254
Deferred expenses - current portion 56,250 ---
---------- ----------
Total Current Assets 2,585,661 3,144,064
---------- ----------
PROPERTY, PLANT AND EQUIPMENT -
net of accumulated depreciation and 455,646 412,966
amortization ---------- ----------
OTHER ASSETS:
Excess of cost over net assets of
businesses acquired 275,707 284,767
Investment in joint venture 26,515 26,515
Investment (Note 4) 500,000 --
Deposits 4,487 4,487
Deferred Expenses (Note 5) 98,437 --
Cash surrender value of life insurance
contract 73,251 60,764
---------- ---------
Total Other Assets 978,397 376,533
---------- ----------
TOTAL ASSETS: $4,019,704 $3,933,563
========== ==========
</TABLE>
See Notes To Financial Statements
1
<PAGE>
VICON FIBER OPTICS CORP.
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION> <CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses $342,381 $362,095
Income taxes payable 122,238 250,591
Current portion of long-term debt 38,550 73,550
----------- ----------
Total Current Liabilities 503,169 686,236
LONG-TERM DEBT 165,350 234,473
Deferred income tax payable 31,074 47,347
----------- ----------
TOTAL LIABILITIES 699,593 968,056
----------- ----------
SHAREHOLDERS' EQUITY:
Common stock - authorized 20,000,000
shares, $.01 par value, issued and
outstanding 8,679,069 shares and
8,529,069 respectively 86,790 85,290
Additional paid-in capital 6,139,288 5,972,038
Deficit (2,905,967) (3,091,821)
---------- ----------
Total Shareholders' Equity 3,320,111 2,965,507
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' $4,019,704 $3,933,563
EQUITY
========== ==========
</TABLE>
See Notes To Financial Statements
2
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION> <CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
SALES $1,056,972 $1,250,678 $2,495,419 $2,559,377
COST OF GOODS SOLD 660,476 731,167 1,509,229 1,484,608
------- ------- --------- ---------
GROSS MARGIN 396,496 519,511 986,190 1,074,769
OTHER COSTS (INCOME) AND EXPENSES:
Selling, general and
administrative expenses 220,105 195,872 652,665 571,300
Research and development 13,514 17,771 53,332 52,742
Interest expense 11,561 12,250 31,322 40,271
Interest income (3,893) (11,069) (19,194) (35,502)
------- ------- ------- -------
TOTAL OTHER COSTS (INCOME) AND 241,287 214,824 718,125 628,811
EXPENSES
INCOME BEFORE PROVISION FOR INCOME 155,209 304,687 268,065 445,958
TAXES
PROVISION FOR INCOME TAXES (Note 3) 32,105 125,644 82,211 179,290
------ ------ ------- -------
NET INCOME $123,104 $179,043 $185,854 $266,668
======== ======== ======== ========
INCOME PER COMMON SHARE: $.01 $.02 $.02 $.03
AVERAGE NUMBER OF SHARES USED IN $8,806,730 $8,794,529 $8,804,152 $8,728,052
COMPUTATION
</TABLE>
See Notes to Financial Statements
3
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION> NINE MONTHS ENDED
SEPTEMBER 30
<S> <C> <C>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $185,854 $266,268
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 54,060 48,060
(Increase) decrease in accounts receivable 26,823 (733,528)
(Increase) decrease in inventory (145,505) (349,897)
(Increase) decrease in prepaid expenses and other
current assets 7,723 12,634
Increase (decrease) in accounts payable and
accrued expenses (19,714) 344,842
Decrease in deferred income taxes 1,840 8,345
Capital stock issued for expenses 14,063 --
Increase (decrease) in deferred income taxes payable (16,273) --
Increase (decrease) in income taxes payable (128,353) 45,948
-------- --------
Total Adjustments (205,336) (623,596)
-------- --------
Net Cash Provided (Used) By Operating Activities (19,482) (357,328)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment (87,680) (62,168)
Increase in cash surrender value of
life insurance contract (12,487) (10,965)
Issuance of stock option for cash -- 1,250
Investment (Note 4) (500,000) --
-------- --------
Net Cash (Used In) Investing Activities (600,167) (71,883)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (104,123) (43,545)
Net Cash Provided By (used in) Financing Activities (104,123) (43,545)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (723,772) (472,756)
CASH AND CASH EQUIVALENTS - Beginning 834,169 1,049,186
--------- ---------
CASH AND CASH EQUIVALENTS - End $110,397 $576,430
======== ========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION> NINE MONTHS ENDED
SEPTEMBER 30
<S> <C> <C>
1998 1997
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $31,322 $40,271
------- -------
Income taxes $200,000 $125,000
------- -------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1998
NOTE 1 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim financial
statements of Vicon Fiber Optics Corp. (the company) contain all adjustments
necessary to present fairly the Company's financial position as of September 30,
1998 and December 31, 1997 and the results of operations and cash flows for the
nine months ended September 30, 1998 and 1997.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its Annual Report on Form 10-KSB for
the year ended December 31, 1997, which is incorporated herein by reference.
NOTE 2 - INVENTORIES
The composition of inventories is:
<TABLE>
<CAPTION> SEPTEMBER 30, 1998 DECEMBER 31, 1997
(Unaudited)
<S> <C> <C>
Raw Materials $784,625 $868,648
Work-in-process 239,552 54,930
Finished goods 397,852 352,946
---------- --------
$1,422,029 $1,276,524
========== ========
</TABLE>
NOTE 3 - INCOME TAXES
Under the provisions of SFAS 109 the Company recognizes deferred tax assets
and liabilities for future tax consequences of events that have been previously
recognized in the financial statements or income tax returns.
NOTE 4 - INVESTMENT
On July 2, 1998, the Company acquired 250,000 shares of common stock of
American Entertainment Group, Inc. (AEG"), doing business as"
AnotherUniverse.com.", at $2.00 per share, for a total of $500,000.00 in cash.
The interest in AEG was acquired with funds from working capital.
NOTE 5 - STOCK BASED COMPENSATION
The Company has adopted SFAS No. 123 "Accounting for Stock Based
Compensation", and accounts for its stock based compensation on the Fair Market
Based Method. The Company will account for the issuance of 150,000 shares of
restricted stock with a fair market value of $168,750 in accordance with SFAS
No. 123 by recording the compensation cost over the restriction period of the
stock.
5
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Net Sales:
Net sales for the nine months ended September 30, 1998 compared to the same
period in 1997 decreased by $63,958. Management attributes this decrease to
timing of orders from various customers.
Cost of Sales:
Cost of sales for the nine months ended September 30, 1998 was 60%,
compared to 58% for the same period in 1997. Management attributes this to an
increase in sales of lower margin products.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the nine months ended
September 30, 1998 increased to $652,665 from $571,300 for the same period in
1997. Management attributes this to increased marketing and selling expenses
and a general increase in administrative expenses.
Financial Condition of the Company:The Company gauges its liquidity and
financial stability by the measurements as shown in the following table:
<TABLE>
<CAPTION> September 30 December 31
1998 1997
(Unaudited)
<S> <C> <C>
Working capital $2,082,492 $2 457,828
Current ratio 5.14 to 1 4.58 to 1
Shareholders' equity $3,320,111 $2,965,507
</TABLE>
6
<PAGE>
PART II
Item 6, Exhibit 11
VICON FIBER OPTICS CORP.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<CAPTION> Three Months Ended Nine Months Ended
September 30, September 30,
<S> <C> <C> <C> <C>
1998 1997 1998 1997
Primary:
Average shares outstanding 8,662,665 8,515,636 8,574,024 8,515,636
Net effect of dilutive stock options -
based on the treasury stock
method using average market price 144,065 278,893 230,128 212,415
--------- --------- --------- ---------
TOTALS 8,806,730 8,794,529 8,804,152 8,728,051
========= ========= ========= =========
Net Income $123,104 $179,043 $185,854 $266,618
========= ========= ========= =========
Per share amount $.01 $.02 $.02 $.03
========= ========= ========= =========
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VICON FIBER OPTICS CORP.
(Registrant)
Date: November 16, 1998 /s/Leonard Scrivo
LEONARD SCRIVO,
President, Chief Executive Officer
7
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] SEP-30-1998
[CASH] 110,397
[SECURITIES] 0
[RECEIVABLES] 953,260
[ALLOWANCES] 0
[INVENTORY] 1,422,029
[CURRENT-ASSETS] 2,585,661
[PP&E] 984,898
[DEPRECIATION] 529,252
[TOTAL-ASSETS] 4,019,704
[CURRENT-LIABILITIES] 503,169
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 86,790
[OTHER-SE] 3,233,231
[TOTAL-LIABILITY-AND-EQUITY] 4,019,704
[SALES] 2,495,419
[TOTAL-REVENUES] 2,514,613
[CGS] 1,509,229
[TOTAL-COSTS] 1,509,229
[OTHER-EXPENSES] 705,997
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 31,322
[INCOME-PRETAX] 268,065
[INCOME-TAX] 82,211
[INCOME-CONTINUING] 185,854
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 185,854
[EPS-PRIMARY] 0.02
[EPS-DILUTED] 0.02
</TABLE>
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