U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB/A
(Amendment No. 1)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1996
or
[_] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ______ to _______
Commission file number 0-13117
MICROFRAME, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
New Jersey 22-2413505
- ------------------------------- -------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
21 Meridian Road, Edison, New Jersey 08820
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(Address of Principal Executive Offices)
(908) 494-4440
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(Issuer's Telephone Number, Including Area Code)
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 [_]
There were 4,819,142 shares of Common Stock outstanding at November 6, 1996
Transitional Small Business Disclosure Format:
Yes [_} No [X]
<PAGE>
INTRODUCTION
This Amendment is being filed (i) to correct the dollar amount of
Inventory for the period ended September 30, 1996 and (ii) to reflect all of the
exhibits being filed with this report.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Information.
The condensed consolidated financial statements included herein have
been prepared by the registrant without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Although the registrant
believes that the disclosures are adequate to make the information presented not
misleading, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest Annual Report on Form 10-KSB.
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<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
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(unaudited)
<TABLE>
<CAPTION>
September 30, March 31,
ASSETS 1996 1996
------------ ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 729,096 $ 48,302
Accounts receivable, less allowance for doubtful
accounts of $100,000 1,236,606 1,540,561
Inventory 1,224,619 1,084,870
Prepaid expenses and other current assets 122,641 77,426
------------ ------------
Total current assets 3,312,962 2,751,159
Property and equipment at cost, net 382,004 409,866
Capitalized software, less accumulated amortization
of $725,084 and $649,332, respectively 316,398 266,319
Goodwill, less accumulated amortization of
$11,085 and $5,766, respectively 90,525 95,844
Security deposits 34,893 34,983
------------ ------------
Total assets $ 4,136,782 $ 3,558,171
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank borrowings $ 40,433 $ 538,754
Accounts payable 255,186 395,619
Accrued payroll and related liabilities 235,624 285,651
Deferred income 247,330 258,856
Other current liabilities 330,135 435,215
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Total current liabilities 1,108,708 1,914,095
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Commitments and contingencies -- --
Long-term debt 52,073 72,833
Stockholders' equity
Common stock - par value $.001 per share;
authorized 50,000,000 shares, issued 4,819,542
shares and outstanding 4,819,142 shares at
September 30, 1996; issued 3,718,075 shares
and outstanding 3,717,675 shares at March 31, 1996 4,819 3,718
Preferred stock - par value $10 per share;
authorized 200,000 shares, none issued -- --
Additional paid-in capital 6,187,756 4,856,924
Accumulated deficit (3,212,574) (3,285,399)
------------ ------------
2,980,001 1,575,243
Less-Treasury stock, 400 shares, at cost (4,000) (4,000)
------------ ------------
Total stockholders' equity 2,976,001 1,571,243
------------ ------------
Total liabilities and stockholders' equity $ 4,136,782 $ 3,558,171
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
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<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
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(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
September 30, September 30,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 3,437,511 $ 2,606,940 $ 1,661,176 $ 742,598
Cost of sales 1,253,890 1,165,874 648,831 425,027
----------- ----------- ----------- -----------
Gross Margin 2,183,621 1,441,066 1,012,345 317,571
Research and development expenses 428,010 294,050 204,060 165,383
Selling, general and administrative
expenses 1,683,019 1,906,137 779,724 947,624
----------- ----------- ----------- -----------
Income (loss) from operations 72,592 (759,121) 28,561 (795,438)
Interest income 21,101 3,062 10,833 244
Interest expense (20,868) (1,694) (6,669) (1,694)
----------- ----------- ----------- -----------
Income (loss) before income tax benefit 72,825 (757,753) 32,725 (796,888)
Income tax benefit 0 0 0 (14,700)
----------- ----------- ----------- -----------
Net income (loss) $ 72,825 $ (757,753) $ 32,725 $ (782,188)
=========== =========== =========== ===========
Per share data
Net income (loss) per share $ 0.02 $ (0.21) $ 0.01 $ (0.21)
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding 4,680,003 3,689,773 4,823,524 3,692,321
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
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<PAGE>
MicroFrame, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
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(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
-------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 72,825 $ (757,753)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 177,845 150,006
Provision for bad debts 31,646 25,145
Provision for inventory obsolescence 17,500 22,877
(Increase) decrease in
Accounts receivable 272,310 593,228
Inventory (157,249) (527,608)
Prepaid expenses and other current assets (45,215) (35,017)
Security deposits 90 (5,521)
Increase (decrease) in
Accounts payable (140,433) 65,014
Accrued payroll and related liabilities (50,027) (116,867)
Deferred income (11,526) 12,456
Other current liabilities (105,080) 75,628
----------- -----------
Net cash provided (used) by operating activities 62,686 (498,412)
----------- -----------
Cash flows from investing activities
Capital expenditures (68,913) (187,238)
Capitalized software (125,831) (149,818)
Acquisition of European Business Associates 0 (39,736)
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Net cash used in investing activities (194,744) (376,792)
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Cash flows from financing activities
Proceeds of short-term borrowings 0 400,000
Repayments of debt (519,081) 0
Issuance of common stock 1,331,933 4,168
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Net cash provided by financing activities 812,852 404,168
----------- -----------
Net increase (decrease) in cash and cash equivalents 680,794 (471,036)
Cash and cash equivalents - beginning of period 48,302 490,261
----------- -----------
Cash and cash equivalents - end of period $ 729,096 $ 19,225
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
-5-
<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
Note 1 - Condensed Consolidated Financial Statements:
- -----------------------------------------------------
The condensed consolidated balance sheets as of September 30, 1996
and March 31, 1996, the condensed consolidated statements of operations for the
six month periods ended September 30, 1996 and 1995 and the condensed
consolidated statements of cash flows for the six month periods then ended 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 cash flows at
September 30, 1996 and 1995 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
financial statements be read in conjunction with the financial statements and
notes thereto as of March 31, 1996 and for the year then ended.
Note 2 - Inventory:
- -------------------
Inventory consists of the following:
September 30, 1996 March 31, 1996
------------------ --------------
Raw materials $ 843,821 $ 676,120
Work in process 333,267 367,820
Finished goods 47,531 40,930
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Total $1,224,619 $1,084,870
========== ==========
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<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
Note 3 - Stockholders' Equity:
- ------------------------------
During the six months ended September 30, 1996, stockholders' equity
changed for the following items:
Net income $ 72,825
Issuance of common stock of $1,331,933
In April, 1996, the Company sold 860,000 shares of common stock to
unrelated investors, at $1.25 per share and received net proceeds of
approximately $1,030,000. In conjunction with this sale, warrants to purchase
860,000 shares of common stock with an exercise price of $1.50 and warrants to
purchase an additional 860,000 shares of common stock with an exercise price of
$2.00 were issued. These warrants expire in April, 2000.
In addition, the Company sold 241,467 shares of common stock at $1.25
per share to four current shareholders of record who held the contractual right
to maintain their share of ownership. The Company received net proceeds of
approximately $300,000. In conjunction with this sale, warrants to purchase
241,467 shares of common stock with an exercise price of $1.50 and warrants to
purchase an additional 241,467 shares of common stock with an exercise price of
$2.00 were issued. These warrants expire in April, 2000.
Note 4 - Net Income Per Share:
- ------------------------------
The computation of earnings per common and common equivalent share is
based upon the weighted average number of common shares outstanding during the
period plus (in periods in which they have a dilutive effect) the effect of
common stock equivalents, comprised of outstanding stock options and warrants.
Fully diluted earnings per share also reflect additional dilution related to
outstanding stock options due to the use of the market price at the end of the
period, when higher than the average price for the period.
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<PAGE>
MICROFRAME, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
Note 5 - Contingent Liabilities
- -------------------------------
The Company is involved in proceedings with respect to certain sales
tax matters. Total amounts included in other current liabilities related to
these proceedings is $100,000 at September 30, 1996. In the opinion of
management of the Company, amounts accrued for assessments in connection with
sales tax are adequate and ultimate resolution of these matters will not have a
material effect on the Company's consolidated financial position, results of
operations or cash flows.
Note 6 - Stock-Based Compensation
- ---------------------------------
In fiscal 1997, the Company will be required to adopt the provisions
of Statement of Financial Standards No. 123, "Accounting for Stock-Based
Compensation". This Statement requires companies to estimate the fair value of
common stock, stock options, or other equity instruments ("Equity Instruments")
issued to employees using pricing models which take into account various factors
such as current price of the common stock, volatility and expected life of the
Equity Instrument. The Standard permits companies to either provide pro forma
footnote disclosure, or to adjust operating results, for the amortization of the
estimated value of the Equity Instrument over the vesting period of the Equity
Instrument. The Company has elected to account for stock options under
Accounting Principles Board Opinion No. 15 and will disclose certain pro forma
information beginning in fiscal 1997.
-8-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
* 3.2 By-Laws of the Company.
* 10.21 1994 Stock Option Plan (as amended on August
16, 1996).
* 10.36 First Amendment to Consulting Agreement dated
as of August 1, 1996 between David I. Gould and
the Company.
* 27.1 Financial Data Schedule.
(b) Reports on Form 8-K: None.
- -------------------------------------------
* Previously filed with the Company's Form 10-QSB for the quarter ended
September 30, 1996.
-9-
<PAGE>
SIGNATURES
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In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: November 14, 1996
MICROFRAME, INC.
/s/ Stephen B. Gray
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Stephen B. Gray, President and
Chief Operating Officer
/s/ Mark A. Simmons
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Mark A. Simmons, Chief Financial
Officer (Principal Financial Officer)
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