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Previous: CARRINGTON LABORATORIES INC /TX/, 10-Q, 1999-05-17 |
Next: EQUITY INCOME FUND FIRST EXCHANGE SERIES AT&T SHARES, 10-Q, 1999-05-17 |
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 March 31, 1999
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 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 par value, 8,679,069 Shares outstanding at March 31, 1999.
<PAGE>
PART I
ITEM 1
VICON FIBER OPTICS CORP.
FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1999
<PAGE>
VICON FIBER OPTICS CORP.
TABLE OF CONTENTS
MARCH 31, 1999
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 1999
and December 31, 1998 1-2
Statements of Operations For the Three
Months Ended March 31, 1999 and 1998 3
Statements of Cash Flows For the Three
Months Ended March 31, 1999 and 1998 4-5
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis
Of Financial Condition and Results of Operations 6-7
PART II 7
<PAGE>
VICON FIBER OPTICS CORP.
BALANCE SHEET
ASSETS
<TABLE>
<S> <C> <C>
March 31, 1999 Dec. 31, 1998
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $288,869 $254,580
Accounts receivable - net of
allowance for uncollectible accounts 445,468 776,538
Inventories (Note 2) 1,670,143 1,625,200
Prepaid expenses and other current 15,091 25,017
assets
Deferred income taxes (Note 6) ___30,646 31,821
Total Current Assets 2,450,217 2,713,156
PROPERTY, PLANT AND EQUIPMENT -
Net of accumulated depreciation and
amortization 428,860 425,262
OTHER ASSETS:
Excess of cost over net assets of
business 269,667 272,687
acquired
Deposits 4,487 4,487
Investment in joint venture 26,515 26,515
Cash surrender value of life insurance 81,556 77,435
contract
Investment 500,000 500,000
Total Other Assets 882,225 881,124
TOTAL ASSETS $3,761,302 $4,019,542
</TABLE>
Page 1
<PAGE>
VICON FIBER OPTICS CORP.
BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
MARCH 31, 1999 DEC. 31, 1998
(UNAUDITED)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $284,900 $566,011
Income taxes payable 105,026 103,423
Current portion of long-term debt 87,988 85,374
Total Current Liabilities 477,914 754,808
LONG-TERM DEBT 102,589 99,098
Deferred income tax payable 56,871 56,995
TOTAL LIABILITIES 637,374 910,901
SHAREHOLDERS' EQUITY:
Common Stock - authorized 20,000,000
shares,
$.01 par value, issued and outstanding 86,790 86,790
8,679,069
Additional paid-in capital 6,139,288 6,139,288
Deficit (2,975,587) (2,976,812)
Deferred stock incentive (126,563) (140,625)
Total shareholders' equity 3,123,928 3,108,641
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,761,302 $3,933,563
</TABLE>
Page 2
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C>
THREE MONTHS ENDED
MARCH 31
1999 1998
SALES $508,221 $752,170
COST OF GOODS SOLD 309,055 446,230
GROSS MARGIN 199,166 305,940
OTHER COSTS (INCOME) AND EXPENSES:
Selling, general and administrative 187,242 218,428
expenses
Research and development 2,267 11,551
Interest expense 6,998 10,710
Interest income (1,220) (7,251)
TOTAL OTHER COSTS (INCOME) AND EXPENSES 195,287 233,438
INCOME BEFORE PROVISION FOR INCOME TAXES 3,879 72,502
PROVISION FOR INCOME TAXES (Note 3) 2,655 31,282
NET INCOME $ 1,224 $41,220
INCOME PER COMMON SHARE:
NET INCOME - BASIC AND DILUTED .00 .00
AVERAGE NUMBER OF SHARES USED IN 8,736,499 8,652,836
COMPUTATION
</TABLE>
Page 3
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
THREE MONTHS ENDED
MARCH 31
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,224 $41,220
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 17,620 18,020
(Increase) decrease in accounts receivable 331,070 378,452
(Increase) decrease in inventory (44,943) (107,917)
(Increase) decrease in prepaid expenses
and other current assets 9,926 (16,113)
(Increase) decrease in deferred income taxes 1,175 0
Increase (decrease) in accounts payable
and accrued expenses (281,111) (80,485)
Increase (decrease)in deferred income taxes (124) (9,538)
payable
Increase (decrease) in income taxes payable 1,603 (184,288)
Total Adjustments 35,216 (1,871)
Net Cash Provided (Used) By Operating Activities 36,440 39,349
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (18,198) (43,125)
(Increase) in cash surrender value of life (4,121) (3,522)
insurance
Net Cash (Used in) Investing Activities (22,319) (46,647)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt 17,528
Repayment of long-term debt (11,422) (46,873)
Decrease in deferred stock incentive 14,062
Net Cash Provided By (Used in) Financing 20,168 (46,873)
Activities
NET INCREASE (DECREASE) IN CASH AND CASH 34,289 (54,171)
EQUIVALENTS
CASH AND CASH EQUIVALENTS - Beginning 254,580 834,169
CASH AND CASH EQUIVALENTS - End $288,869 $779,998
</TABLE>
Page 4
<PAGE>
VICON FIBER OPTICS CORP.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
THREE MONTHS ENDED
MARCH 31
1999 1998
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $6,998 $10,335
Income taxes $0 $225,000
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
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 March 31,
1999 and December 31, 1998 and the results of operations and cash flows for the
three months ended March 31, 1999 and 1998.
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, 1998, which is incorporated herein by reference.
Page 5
<PAGE>
NOTE 2 - INVENTORIES
The composition of inventories is:
<TABLE>
<S> <C> <C>
MARCH 31, 1999 DEC. 31, 1998
(Unaudited)
Raw materials $1,088,565 $1,065,611
Work-in-process 97,452 91,890
Finished goods ___484,126 ___467,699
$1,670,143 $1,625,200
</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.
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Sales
Net sales for the three months ended March 31, 1999 compared to the same period
in 1998 decreased by $243,949. Management attributes this principally to
decreased sales of the Company's fiber optic dental video components due to
downsizing and acquisitions among the Company's customers that resulted in a
temporary delay in orders from these customers.
Cost of Sales
Cost of sales for the three months ended March 31, 1999 increased to 61% as
compared to 59% for the same period in 1998. Management attributes this to
fixed manufacturing overhead being absorbed by lower sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March
31, 1999 decreased to $187,242 from $218,428 for the three months ended March
31, 1998. Management attributes this to decreased general and administrative
expenses required to administer the decreased sales.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs having been written
using two digits, rather then four, to define the applicable year. Software
programs and hardware that have date-sensitive software or embedded chips may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations causing disruptions
of operations, including a temporary inability to engage in normal business
activities.
Based on recent assessments, the Company has determined that its critical
software (primarily widely-used software packages) and all of its critical
business systems, including manufacturing instrumentation, are already year
2000 compliant and no material expenditures are required. Nevertheless,
throughout 1999, assessment, testing and remediation, if necessary, will
continue.
The Company has initiated communications with third parties with whom the
Company has material business relationships to determine the extent of their
remediation of the year 2000 issue. However, there can be no guarantee that
the non-compliance of other companies will not have an adverse effect on the
Company's operations.
Although no assurance can be given that there will be no interruption of
operations in the year 2000, the Company believes that it has reasonably
assessed all of its systems in order to ensure that the Company will not suffer
any material adverse effect from the year 2000 issue.
Page 6
<PAGE>
Financial Condition of the Company
The Company gauges its liquidity and financial stability by the measurements as
shown in the following table:
<TABLE>
<S> <C> <C>
March 31, 1999 December 31,
1998
(Unaudited)
Working Capital $1,972,303 $1,958,348
Current ratio 5.13 to 1 3.59 to 1
Shareholders' Equity $3,123,928 $3,108,641
</TABLE>
PART II
Items 1-5 not applicable.
Item 6, Exhibit 11:
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months Ended
March 31,
1999 1998
Basic:
Average shares outstanding 8,679,069 8,529,069
Net effect of dilutive stock
options -
based on the treasury stock 57,430 123,767
method
using average market price
Diluted 8,736,499 8,652,836
Net Income $ 1,224 $41,220
Per share amount - basic and $.00 $.00
diluted
</TABLE>
Page 7
<PAGE>
SIGNATURES
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: May 14, 1999 /s/Leonard Scrivo
LEONARD SCRIVO,
President and Chief Executive Officer
Page 8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 288869
<SECURITIES> 0
<RECEIVABLES> 445468
<ALLOWANCES> 0
<INVENTORY> 1670143
<CURRENT-ASSETS> 2450217
<PP&E> 943343
<DEPRECIATION> 444091
<TOTAL-ASSETS> 3761302
<CURRENT-LIABILITIES> 477914
<BONDS> 0
0
0
<COMMON> 86790
<OTHER-SE> 3037138
<TOTAL-LIABILITY-AND-EQUITY> 3761302
<SALES> 508221
<TOTAL-REVENUES> 509441
<CGS> 309055
<TOTAL-COSTS> 309055
<OTHER-EXPENSES> 189509
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6998
<INCOME-PRETAX> 3879
<INCOME-TAX> 2655
<INCOME-CONTINUING> 1224
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1224
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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