SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE OF 1934
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For the Quarter ended Commission File No.
12/31/95 0-12595
MicroENERGY, Inc.
(Exact Name of Registrant as specified in its Charter)
Delaware 36-3262274
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
350 Randy Road, Carol Stream, IL 60188
(Address of Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (708) 653-5900
Indicated 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 report(s), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest
practicable date.
As of December 31, 1995 there were outstanding 149,451,563 shares
of Common Stock, $.001 par value.
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MICROENERGY, INC.
INDEX
Part 1 - Financial Information
Item 1 - Financial Statements
Condensed Balance Sheet
December 31, 1995 (unaudited) and June 30, 1995
Condensed statement of Operations (unaudited) for the
quarter and six months ending December 31, 1995 and
December 31, 1994.
Condensed Statement of Cash Flows (unaudited) six
months ending December 31, 1995 and December 31, 1994.
Notes to condensed Financial Statements (unaudited)
Item 2 - Management discussion and analysis of financial condition
and results of operations.
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MICROENERGY, INC.
CONDENSED BALANCE SHEETS
Six Months
Ending Year Ended
12/31/95 6/30/95
(unaudited) (audited)
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ASSETS
Current assets:
Cash $ 9,618 $ 113,227
Accounts receivable 1,500,700 1,193,995
Inventories 3,033,235 2,712,224
Other current assets 50,433 53,725
Total current assets 4,593,986 4,073,171
Machinery and equipment 4,639,195 4,390,516
Accumulated depreciation (2,891,554) (2,604,333)
1,747,641 1,786,183
Other assets, net 270,435 289,177
$ 6,612,062 $6,148,531
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $1,656,090 $1,165,211
Current portion of long-term obligations 908,958 858,808
Accounts payable 1,397,327 1,149,587
Accrued expenses 263,579 456,206
Total current liabilities 4,225,954 3,629,812
Long-term obligations 3,243,819 3,514,009
Total liabilities 7,469,773 7,143,821
Stockholders' equity:
Convertible preferred stock, no par value -
800 shares authorized; 769 issued and
converted
Common stock, $.001 par value - 180,000,000
shares authorized in 1995 and 1994;
114,111,563 shares issued in 1995 and
116,111,563 in 1994 149,451 113,961
Additional paid-in capital 5,692,079 5,678,919
Accumulated deficit (5,356,650) (5,356,650)
Unearned restricted stock compensation (1,428,550) (1,455,550)
Common stock purchase warrants, 75 75
Treasury stock, at cost, 850,659 shares (16,386) (16,386)
Unrealized gain on marketable securities 40,341
Current Year Earnings 102,270
Total stockholders' equity (857,711) (995,290)
$6,612,062 $6,148,531
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<PAGE> MICROENERGY, INC.
STATEMENTS OF OPERATIONS
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3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
12/31/95 12/31/94 12/31/95 12/31/94
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Sales $ 3,334,156 $ 3,991,362 $ 6,721,421 $ 7,668,227
Expenses:
Facility, pre-
production and
production 2,734,806 3,280,762 5,429,931 6,297,291
Research and
Development 182,538 190,739 402,677 364,979
Selling, Gen and
Administrative 295,792 363,541 626,288 718,762
Interest exp, net 81,967 84,628 160,255 166,249
Net Profit After Tax 39,053 71,692 102,270 120,946
Net earnings/(loss)
per share $ 0.001 $ 0.001 $ 0.001 $ 0.001
Weighted avg number
of shares of
common stock 114,350,451 114,111,563 114,350,451 114,111,563
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MICROENERGY, INC.
STATEMENTS OF CASH FLOWS
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6 Months 6 Months
Ending Ending
12/31/95 12/31/94
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Cash flows from operating
activities:
Net (losses) earnings $ 102,270 $ 120,946
Adjustments to reconcile net
(losses) earnings to net cash
provided by operations:
Depreciation 287,221 286,722
Changes in assets and
liabilities:
Accounts receivable (306,705) (146,109)
Inventories (321,011) 142,307
Other current assets 22,034 (87,200)
Accounts payable 247,740 198,411
Accrued expens (192,627) 183,866
(263,348) 577,997
Net cash provided (used) by
operating activities (161,078) 698,943
Cash flows (used in) provided by
investing activities:
Additions to equipment (248,679) (116,771)
Cash flows provided by (used in)
financing activities:
Notes Payable 541,029 (462,948)
Long-term debt, net of payments (270,190) (179,937)
Equity Transactions 35,309 27,000
Net cash provided by (used in)
financing activities 306,148 (615,885)
Net increase (decrease) in cash (103,609) (33,713)
Cash at beginning of year 113,227 45,792
Cash at end of year $ 9,618 $ 12,079
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MICROENERGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of December 31, 1995, the
consolidated statement of income for the three and six month
periods ending December 31, 1995 and December 31, 1994 and the
condensed statement of cash flows for the six month period ending
December 31, 1995 and December 31, 1994 have been prepared by the
Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations and changes in financial position at December 31, 1995
and for all periods presented have been made.
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 condensed statements be read in
conjunction with the financial statements and notes thereto
included in the Company's June 30, 1995 10K report. The results
of operations for the period ended December 31, 1995 is not
necessarily indicative of the operating results for the full
year.
2. NOTES TO THE CONDENSED FINANCIAL STATEMENTS
On December 12, 1995, MicroENERGY purchased a 9,600 square foot
industrial building on 1.34 acres in Memphis, Missouri. A bank
financed 100% of the purchase price with a loan for $80,000.00 at
5% interest. The loan requires monthly principal and interest
payments amortizing over ten (10) years with a five (5) year
maturity. The loan is secured with a first mortgage on the
building and land. The transformer, toroid and cable assembly
departments currently located in Quincy, Illinois will be moved
to this facility in early 1996.
On December 29, 1995, Officers of the Company exercised Class D
Stock Purchase Warrants for 35,000,000 shares of common stock at
an exercise price of $.00125 per share.
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Part 1
Item 2
MICROENERGY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net Sales for the three months ended December 31, 1995 totalled
$3,334,156 as compared to $3,991,362 for the prior year period.
Net sales for the six month period ending December 31, 1995
totalled $6,721,421 as compared to $7,668,227 for the prior year
period. The six month revenues were $946,806 (8%) below the
prior year period. The primary cause of the reduction was the
termination of sales to one particular customer, as that customer
downgraded the overall requirements of its products, which
permitted it to purchase low cost power supplies from an offshore
manufacturer. The Company at 12/31/95 had backlog of released
orders of $5,013,00 as compared to $3,550,300 at 12/31/94. The
vast majority of these orders are scheduled to ship in the third
fiscal quarter. The combination of this backlog with non-binding
production schedules that the Company has received on existing
customer projects, as well as the pre-production orders from new
customers, indicate that the shortfall in sales compared to
fiscal 1995 will be eliminated in the second half of this fiscal
year.
Despite the reduction in net sales, operating income fell only
$24,670 from the first half of fiscal 1995 to the fist half of
fiscal 1996. The Company was able to prevent a larger reduction
in operating income by reducing manufacturing costs signifi-
cantly. These costs were 14% below the prior year period, while
net sale declined 8%. In addition, selling, general , and
administrative costs fell by 13% in the six month period. The
increased operational efficiency evidenced in the first half of
fiscal 1996 should prove beneficial to the Company's operating
statements if the anticipated increase in net sales in the second
half of the year is realized.
Liquidity and Capital Resources
At December 31, 1995, the Company had working capital of
$393,657, which was not significantly different from the $443,359
it held at June 30, 1995, the end of its last fiscal year. The
Company's primary source of operating funds has been its credit
line. The primary bank lender has an asset-based loan facility
of up to $2,000,000 dependent on predetermined formulas involving
the Company's accounts receivable and inventories. The balance
outstanding on the credit line at December 31, 1995 was
$1,665,091. The total amount available to borrow at that date
was $1,667,091. The Company is currently reviewing its options
to infuse additional equity.
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The Company's accounts receivable at December 31, 1995 totalled
$1,500,700, which is one of the highest levels since 1993. The
increase of 26% over the fiscal year end balance is primarily a
result of a faulty calendar year-end wire transfer from one
customer of $256,000, which did not arrive until after the end of
the fiscal quarter in early January. The Company does not
believe the increase represents a trend, and expects the growth
of accounts receivable to be proportionate to the growth in net
sales in the future.
The Company expects that the available borrowings from the asset-
based line of credit when combined with the cash flow from
current operations will be sufficient to service the Company's
debt and fund operations for the following fiscal year.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1933, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date February 8, 1996 By(s) Robert G. Gatza
Robert G. Gatza
President and CEO
Date February 8, 1996 By(s) Robert J. Fanella
Robert J. Fanella
Chief Financial Officer
and Treasurer
