FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1996
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: 0-15486
MIKRON INSTRUMENT COMPANY, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-1895668
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
16 Thornton Road, Oakland, New Jersey 07436
(Address of Principal Executive Office) (Zip Code)
(201) 405-0900
(Registrant's telephone number including area code)
Indicate 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 reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
The number of shares of registrant's Common Stock, $.003 par value,
outstanding as of April 30, 1996 was 3,654,200 shares.
<PAGE>
MIKRON INSTRUMENT COMPANY, INC.
INDEX
Page No.
PART I - FINANCIAL INFORMATION:
Balance Sheet - April 30, 1996 and October 31, 1995 1
Statement of Operations - Three months and six months ended
April 30, 1996 and 1995 2
Statement of Cash Flows - Six months ended
April 30, 1996 and 1995 3
Notes to Financial Statements 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5-6
PART II - OTHER INFORMATION 7
SIGNATURES 8
<PAGE>
MIKRON INSTRUMENT COMPANY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30,
1996 October 31,
(Unaudited) 1995
---------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 155,038 $ 463,832
Investment securities 100,000 400,000
Trade Accounts receivable, less allowance for doubtful
accounts of $107,000 in 1996 and 1995 1,136,249 1,146,121
Inventories 2,363,733 2,070,365
Prepaid expenses and other current assets 99,033 28,142
---------------- ---------------
TOTAL CURRENT ASSETS 3,854,053 4,108,460
PROPERTY AND EQUIPMENT 231,252 110,383
OTHER ASSETS 112,500 137,500
---------------- ---------------
$ 4,197,805 $ 4,356,343
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 739,325 $ 780,686
Current maturity of long-term liability 50,000 50,000
---------------- ---------------
TOTAL CURRENT LIABILITIES 789,325 830,686
---------------- ---------------
LONG-TERM LIABILITY 75,000 100,000
---------------- ---------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.003 par value,
authorized 15,000,000 shares, 3,654,200 shares
issued and outstanding in 1996 and 1995 12,181 12,181
Paid-in capital 3,151,831 3,151,831
Retained earnings 169,468 261,645
---------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 3,333,480 3,425,657
---------------- ---------------
$ 4,197,805 $ 4,356,343
================ ===============
</TABLE>
See notes to financial statements.
-1-
<PAGE>
MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
April 30, April 30,
----------------------------------- --------------------------------
1996 1995 1996 1995
---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 1,647,936 $ 1,762,895 $ 3,256,497 $ 3,104,344
Royalties 59,803 30,186 84,803 64,682
Investment income 4,187 8,939 13,807 16,793
---------------- ---------------- --------------- ---------------
TOTAL REVENUES 1,711,926 1,802,020 3,355,107 3,185,819
---------------- ---------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of goods sold 865,094 782,764 1,587,709 1,397,879
Selling, general and administrative 819,214 751,615 1,596,183 1,399,559
Research and development 150,247 105,725 263,392 207,447
---------------- ---------------- --------------- ---------------
TOTAL COSTS AND EXPENSES 1,834,555 1,640,104 3,447,284 3,004,885
---------------- ---------------- --------------- ---------------
NET INCOME (LOSS) $ (122,629) $ 161,916 $ (92,177) $ 180,934
================ ================ =============== ===============
NET INCOME (LOSS) PER SHARE $ (0.03) $ 0.04 $ (0.02) $ 0.05
================ ================ =============== ===============
NUMBERS OF SHARES USED IN
COMPUTATION 3,734,856 3,688,050 3,734,856 3,688,050
================ ================ =============== ===============
</TABLE>
See notes to financial statements.
-2-
<PAGE>
MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
April 30,
-----------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ (92,177) $ 180,934
---------------- ----------------
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation 42,026 31,832
Amortization 25,000 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 9,872 (268,507)
(Increase) decrease in inventories (293,368) (104,737)
(Increase) decrease in prepaid expenses and other assets (70,891) (16,909)
Increase (decrease) in accounts payable and accrued expenses (41,361) 138,319
---------------- ----------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (420,899) (39,068)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (162,895) (14,161)
Decrease in long-term liability (25,000) -
---------------- ----------------
NET CASH FROM INVESTING ACTIVITIES (187,895) (14,161)
---------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (608,794) (53,229)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 863,832 876,513
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 255,038 $ 823,284
================ ================
</TABLE>
See notes to financial statements.
-3-
<PAGE>
MIKRON INSTRUMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair
presentation of the financial position and the results of operations
for the interim periods presented.
Certain financial information which is normally included in
financial statements prepared in accordance with generally accepted
accounting principles, but which is not required for interim reporting
purposes has been condensed or omitted. The accompanying financial
statements should be read in conjunction with the financial statements
and notes thereto as of October 31, 1995 contained in the Company's
Annual Report on Form 10-K.
2. EARNINGS (LOSS) PER SHARE
Per share information is computed based on the weighted
average number of common shares and dilutive common share equivalents
outstanding during the respective periods.
-4-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's results of operations and financial
condition. This discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein.
a. Results of Operations
Net sales for the quarter ended April 30, 1996 were $1,648,000
as compared to net sales of $1,763,000 for the quarter ended April 30,
1995. The cost of sales as a percentage of net sales for the 1996
period was 52% as compared to 44% for the comparable 1995 period. Net
sales for the six months ended April 30, 1996 were $3,256,000 as
compared to net sales of $3,104,000 for the six months ended April 30,
1995. The cost of sales as a percentage of net sales for the six months
ended April 30, 1996 was 49% as compared to 45% for the comparable 1995
period. The increase in cost of sales as a percentage of net sales for
the three and six months ended April 30, 1996 is due to the hiring of
several people for production to reduce backlog and improve delivery
time.
Selling, general and administrative expenses for the three and
six month periods ended April 30, 1996 were $819,000 and $1,596,000 as
compared to $751,000 and $1,400,000 for the respective 1995 periods.
The increase in the three and six month periods ended April 30, 1996 is
due to Mikron's relocation from Wyckoff, New Jersey to Oakland, New
Jersey. Costs of the move are estimated at $120,000. During the six
month period the Company implemented a new Quality System and received
certification to ISO 9001. Costs of the effort are estimated at
$70,000. This certification will assist in the Company's efforts to
grow sales both domestically and internationally. Expenses of $7,500
have also been incurred as part of an ongoing project to have products
tested and certified to the new CE standard for products sold into
European Markets.
Research and development expenses for the quarter ended April
30, 1996 were $150,000 as compared to $105,000 for the quarter ended
April 30, 1995. As for the six months ended April 30, 1996, research
and development expenses were $263,000 as compared to $207,000. The
increases in the three and six month periods ended April 30, 1996 over
the comparable 1995 periods is attributable to the Company's efforts to
develop new infrared thermometers.
Other income for the six months ended April 30, 1996 was
$99,000, as compared to $81,000 for the six months ended April 30,
1996. This represents $85,000 of royalty income and $14,000 of
investment income for the six months ended April 30, 1996, compared to
$65,000 of royalty income and $16,000 of investment income for the six
months ended April 30, 1995.
-5-
<PAGE>
b. Material Change in Financial Condition, Liquidity and Capital
Resources
The Company's working capital decreased from $3,278,000 at
October 31, 1995 to $3,065,000 at April 30, 1996. This is primarily due
to the relocation of the entire Company and purchase of new machinery
and equipment.
At April 30, 1996, the Company's capital resources and its
sources of liquidity was $255,000 in cash and temporary cash
investments.
Management does not believe that a return of inflation will
have a material adverse effect on the Company's operations because it
believes that the Company will be able to increase its selling prices
to reflect most increases in its cost.
-6-
<PAGE>
PART II - OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS - NONE
Item 2 - CHANGES IN SECURITIES - NONE
Item 3 - DEFAULTS UPON SENIOR SECURITIES - NONE
Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS -
NONE
Item 5 - OTHER INFORMATION - NONE
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) None.
(b) None.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MIKRON INSTRUMENT COMPANY, INC.
\s\ Keikhosrow Irani
------------------------------------
Keikhosrow Irani, President, as
Registrant's duly authorized officer
\s\ Douglas Frank
------------------------------------
Douglas Frank, Vice President
and Sales Manager
\s\ Alex Wu
------------------------------------
Alex Wu, Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
10-Q REPORT FOR THE QUARTER ENDED APRIL 30, 1996 FOR MIKRON INSTRUMENT COMPANY,
INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q REPORT FOR THE
QUARTER ENDED APRIL 30,1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> APR-30-1996
<CASH> 155,038
<SECURITIES> 100,000
<RECEIVABLES> 1,243,249
<ALLOWANCES> (107,000)
<INVENTORY> 2,363,733
<CURRENT-ASSETS> 3,854,053
<PP&E> 958,498
<DEPRECIATION> (727,246)
<TOTAL-ASSETS> 4,197,805
<CURRENT-LIABILITIES> 789,325
<BONDS> 0
0
0
<COMMON> 12,181
<OTHER-SE> 3,321,299
<TOTAL-LIABILITY-AND-EQUITY> 4,197,805
<SALES> 1,647,936
<TOTAL-REVENUES> 1,711,926
<CGS> 865,094
<TOTAL-COSTS> 865,094
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (122,629)
<INCOME-TAX> 0
<INCOME-CONTINUING> (122,629)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (122,629)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
