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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE OF 1934
For the quarter period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 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: (630) 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 September 30, 1997 there were outstanding 2,018,839 shares of Common
Stock, $.01 par value.
MICROENERGY, INC.
INDEX
Part 1 - Financial Information
Item 1 - Financial Statements
Condensed Balance Sheets for September 30, 1997 (unaudited)
and June 30, 1997 (audited).
Condensed Statements of Operations (unaudited) for the
quarters ending September 30, 1997 and September 30, 1996.
Condensed Statements of Cash Flows (unaudited) for the three
months ending September 30, 1997 and September 30, 1996.
Notes to Condensed Financial Statements (unaudited)
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations.
MICROENERGY, INC.
CONDENSED BALANCE SHEETS
1st Quarter
Ending Year Ended
9/30/97 6/30/97
(unaudited) (audited)
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ASSETS
Current assets:
Cash $ 12,018 $ 110,086
Accounts receivable 2,164,940 2,122,302
Inventories 4,027,323 4,068,524
Other current assets 514,120 586,870
Total current assets 6,718,401 6,887,782
Property and equipment 6,248,189 6,225,214
Accumulated depreciation (4,059,457) (3,869,092)
2,188,732 2,356,122
Other assets, net 102,274 102,275
$ 9,009,407 $9,346,179
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Current portion of long-term obligations $ 901,508 948,326
Accounts payable 1,102,837 1,579,539
Accrued expenses 448,277 455,563
Total current liabilities 2,452,622 2,983,428
Long-term obligations 4,151,779 3,873,622
Total liabilities 6,604,401 6,857,050
Stockholders' equity:
8% cumulative Series A preferred stock,
$7.00 liquidation preference, 4,000,000,
494,500 shares issued in 1997 2,605,282 2,605,282
Common stock, $.01 par value - 4,000,000
shares authorized; 2,018,839 shares
issued in 1998 and 421,477 in 1997 20,218 20,218
Additional paid-in capital 6,423,535 6,423,535
Accumulated deficit (5,255,998) (5,255,998)
Unearned restricted stock compensation (1,334,050) (1,347,550)
Common stock purchase warrants, 75 75
Preferred stock warrants 112,725 112,725
Treasury stock, at cost 1,898 shares (16,386) (16,386)
Unrealized loss on marketable securities (52,772) (52,772)
Current Year Earnings/(Loss) (97,623) --
Total stockholders' equity 2,405,006 2,489,129
$9,009,407 $9,346,179
========== ==========
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MICROENERGY,INC
STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
9/30/97 9/30/96
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Sales $3,694,813 $3,442,990
Expenses:
Facility, pre-production,
and production 2,876,360 2,743,737
Research and development 358,300 311,934
Selling,General and
Administrative 448,235 412,840
Operating Income/(Loss) 11,918 (25,521)
Interest expense, net 109,541 71,676
Net Income/(Loss) $ (97,623) $ (97,197)
========== =========
For earnings per share caculation:
Net Income/(Loss) $ (97,623) $ (97,197)
Preferred stock dividends (69,230) (104,230)
Net Income/(Loss) available
to common shareholders $ (166,853) $(201,427)
========== =========
Net Income/(loss) per share $ (.08) $ (.48)
Weighted average number
of shares of common
stock outstanding 2,018,824 421,477
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MICROENERGY, INC.
STATEMENTS OF CASH FLOWS
Three Months Three Months
Ending Ending
9/30/97 9/30/96
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Cash flows from operating
activities:
Net (losses) earnings $ (97,623) $ (97,197)
Adjustments to reconcile net
(losses) earnings to net cash
provided by operations:
Depreciation 190,365 165,741
Changes in assets and
liabilities:
Accounts receivable ( 42,638) (354,458)
Inventories 41,201 (114,602)
Other current assets 72,751 148,355
Accounts payable (476,702) (695,413)
Accrued expenses ( 7,286) (133,875)
(222,309) (984,252)
Net cash provided (used) by
operating activities ( 319,932) (1,081,449)
Cash flows (used in) provided by
investing activities:
Additions to equipment (22,975) (49,859)
Cash flows provided by (used in)
financing activities:
Notes Payable -- (521,019)
Long-term debt, net of payments 231,339 (1,061,016)
Equity Transactions 13,500 2,703,728
Net cash provided by (used in)
financing activities 244,839 1,121,693
Net increase (decrease) in cash (98,068) (9,615)
Cash at beginning of period 110,086 19,615
Cash at end of period $ 12,018 $ 10,000
</TABLE> MICROENERGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONDENSED FINANCIAL STATEMENTS
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The condensed balance sheet as of September 30, 1997, the consolidated
statement of income for the three month periods ending September 30, 1997
and September 30, 1996 and the condensed statement of cash flows for the
three month period ending September 30, 1997 and September 30, 1996 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 September 30, 1997 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, 1997 10K report.
The results of operations for the period ended September 30, 1997 are not
necessarily indicative of the operating results for the full year.
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 September 30, 1997 were $3,694,813,
representing a 7% increase over the prior year period of $3,442,990. The
fiscal first quarter revenues were approximately 8% below the sales level
budgeted by the Company. The cause of the shortfall and the likely impact
for the balance of the year relative to budgeted shortfalls is being
researched to determine possible consequences in future quarters. A net
loss of $97,623 was incurred for the current quarter, which was essentially
equivalent to the loss in the prior year period of $97,197.
Manufacturing costs decreased to 77.8% of revenues as compared to 79.7% in
the prior year. The major reason for the decrease was increased
productivity as a result of the new production equipment installed last
year. In the non-direct cost areas, total costs for Research & Development
and SG&A increased by $46,366 and $35,395. Interest cost for the quarter
were $109,541 as compared to $71,676 in the prior year period. The increase
in interest was a result of the fixed asset financing for the purchases made
in the last fiscal year and a higher utilization of the line of credit.
Liquidity and Capital Resources
The Company at September 30, 1997, had positive working capital of
$4.3 million as compared $3.9 million at the end of the fiscal year
June 30, 1997. The improvement is due mainly to a reduction of Trade
Accounts Payable by approximately $477,000. Accounts Receivable and
Inventory balances are not significantly different than the fiscal year end
June 30, 1996. The Company has approximately $500,000 available on its Line
of Credit as of the end of the quarter.
The Company is current with all of its debt obligations. Management expects
that its current cash and working capital position, combined with cash
expected to be generated from operations will be sufficient to service the
Company's debt and fund the Company for the coming fiscal year.
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: November 14, 1997 By(s) Robert G. Gatza
Robert G. Gatza
President and CEO
Date: November 14, 1997 By(s) Robert J. Fanella
Robert J. Fanella
Chief Financial Officer
and Treasurer
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,018
<SECURITIES> 0
<RECEIVABLES> 2,214,940
<ALLOWANCES> (50,000)
<INVENTORY> 4,027,323
<CURRENT-ASSETS> 6,718,401
<PP&E> 6,248,189
<DEPRECIATION> (4,059,457)
<TOTAL-ASSETS> 9,009,407
<CURRENT-LIABILITIES> 2,452,622
<BONDS> 0
0
2,605,282
<COMMON> 20,218
<OTHER-SE> 112,725
<TOTAL-LIABILITY-AND-EQUITY> 9,009,407
<SALES> 3,694,813
<TOTAL-REVENUES> 3,694,813
<CGS> 2,876,360
<TOTAL-COSTS> 3,682,695
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109,541
<INCOME-PRETAX> (97,623)
<INCOME-TAX> 0
<INCOME-CONTINUING> (97,623)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
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