<PAGE> 1
FORM 10-QSB
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 July 31, 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: 0-15486
-------
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 July 31, 1997 was 3,654,200 shares.
<PAGE> 2
MIKRON INSTRUMENT COMPANY, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION:
Balance Sheet - July 31, 1997 and October 31, 1996 1
Statement of Operations - Three months and nine months ended July 31,
1997 and 1996 2
Statement of Cash Flows - Three months and nine months ended July 31,
1997 and 1996 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
</TABLE>
<PAGE> 3
MIKRON INSTRUMENTS COMPANY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
July 31 October 31
------------ -------------
1997 1996
------------ -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 312,627 $ 206,364
Investment securities -
Trade accounts receivable, less allowance for
doubtful accounts of $137,000 and $107,000. 1,081,075 1,248,776
Inventories 1,907,997 2,255,277
Prepaid expenses and other current assets 91,837 73,337
------------ ------------
TOTAL CURRENT ASSETS 3,393,536 3,783,754
PROPERTY AND EQUIPMENT, net 273,484 293,117
OTHER ASSETS 50,000 87,500
------------ ------------
$ 3,717,020 $ 4,164,371
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 427,158 $ 515,057
Short-term notes payable 100,000
Current portion of long-term debt 50,000
Current portion of capital lease obligation 3,323
------------ ------------
TOTAL CURRENT LIABILITIES 427,158 668,380
------------ ------------
LONG-TERM LIABILITIES:
Long-term debt 37,500
Capital lease obligation 14,245
------------
TOTAL LONG-TERM LIABILITIES 51,745
------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock, $.003 par value;
authorized - 15,000,000 shares; issued and outstanding
3,654,200 shares in 1996 and 1995 12,181 12,181
Additional paid-in capital 3,151,831 3,151,831
Retained earnings 125,850 280,234
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,289,862 3,444,246
------------ ------------
$ 3,717,020 $ 4,164,371
============ ============
</TABLE>
See notes to financial statements.
- 1 -
<PAGE> 4
MIKRON INSTRUMENTS COMPANY, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ending July 31, Nine Months Ending July 31,
----------------------------- -----------------------------
1997 1996 1997 1996
------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 1,713,054 $ 1,942,110 $ 5,017,425 $ 5,198,607
Royalties 101,778 44,265 162,192 129,068
Investment income 1,926 320 2,533 14,127
------------ ------------ ------------ ------------
TOTAL REVENUES 1,816,758 1,986,695 5,182,150 5,341,802
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Cost of goods sold 850,013 979,213 2,441,306 2,566,922
Selling, general and administrative 788,903 788,336 2,403,995 2,384,519
Research and development 167,887 142,856 491,229 406,248
------------ ------------ ------------ ------------
TOTAL COSTS AND EXPENSES 1,806,803 1,910,405 5,336,530 5,357,689
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 9,955 $ 76,290 $ (154,380) $ (15,887)
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE $ 0.00 $ 0.02 $ (0.04) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES 3,684,890 3,734,856 3,684,890 3,734,856
============ ============ ============ ============
</TABLE>
See notes to financial statements.
- 2 -
<PAGE> 5
MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended July 31,
----------------------------
1997 1996
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (154,384) $ (15,887)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 43,078 66,835
Amortization 37,500 37,500
Changes in assets and liabilities:
(Increase) in trade accounts receivable 167,701 13,282
(Increase) decrease in inventories 347,280 (267,446)
(Increase) decrease in prepaid and other current assets (18,500) (33,660)
Increase (decrease) in accounts payable and accrued liabilities (87,899) (202,283)
------------ -------------
489,160 (385,772)
------------ -------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 334,776 (401,659)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (23,445) (201,078)
------------ -------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (23,445) (201,078)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short term notes payable (100,000)
Increase (decrease) in long term debt (87,500) (37,500)
Increase (decrease) in capital lease obligation (17,568)
------------ -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES (205,068) (37,500)
------------ -------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 106,263 (640,237)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 206,364 863,832
------------ -------------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 312,627 $ 223,595
============ =============
</TABLE>
See notes to financial statements.
- 3 -
<PAGE> 6
MIKRON INSTRUMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
(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, 1996 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> 7
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 July 31, 1997 were $1,713,054
as compared to net sales of $1,942,110 for the quarter ended July 31,
1996. The cost of sales as a percentage of net sales for the 1997 and
1996 period was 50%. Net sales for the nine months ended July 31,
1997 were $5,017,425 as compared to net sales of $5,198,607 for the
nine months ended July 31, 1996. The cost of sales as a percentage of
net sales for the nine months ended July 31, 1997 and 1996 was 49%.
The reduction in sales for the three and nine month periods ended July
31, 1997 are due to softer market conditions experienced during those
periods.
Selling, general and administrative expenses for the three and
nine month periods ended July 31, 1997 were $788,903 and $2,403,995
as compared to $789,091 and $2,385,274 for the respective 1996
periods. No significant changes ocurred during the quarter and nine
months ended July 31, 1997 for selling, general and administrative
expenses.
Research and development expenses for the quarter ended July
31, 1997 were $167,887 as compared to $142,856 for the quarter ended
July 31, 1996. As for the nine months ended July 31, 1997, research
and development expenses were $491,229 as compared to $406,248 for the
nine months ended July 31, 1996. The increases in the three and nine
month periods ended July 31, 1997 over the comparable 1996 periods is
attributable to increased hireing of new people for the research and
development department and increased spending for materials.
Other income for the quarter ended July 31, 1997 was $103,704
as compared to $45,341 for the quarter ended July 31, 1996. This
represents $101,778 of royalty income and $1,926 of investment income
for the quarter ended July 31, 1997, compared to $44,265 of royalty
income and $1,076 of investment income for the quarter ended July 31,
1996. As for the nine months ended July 31, 1997, it was $164,725 as
compared to $143,951 for the nine months ended July 31, 1996. This
represents $162,192 of royalty income and $2,533 of investment income
for the nine months ended July 31, 1997, compared to $129,068 of
royalty income and $14,883 of investment income for the nine months
ended July 31, 1996. The increase in royalty income is attributable
to successful collection efforts associated with delinquent royalties.
b. Material Change in Financial Condition, Liquidity and Capital Resources
-5-
<PAGE> 8
The Company's working capital decreased from $3,115,000 at
October 31, 1996 to $2,966,378 at July 31, 1997 due to a reduction in
inventory levels and accounts receivable offset by decreases in short
term debt.
At July 31, 1997, the Company's capital resources and its
sources of liquidity was $312,627 in cash and temporary cash
investments and acoounts receivable of $1,081,075.
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> 9
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> 10
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.
-------------------------------------------------------
Keikhosrow Irani, President, as
Registrant's duly authorized officer
-------------------------------------------------------
Alex Wu, Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JUL-31-1997
<CASH> 312,627
<SECURITIES> 0
<RECEIVABLES> 1,081,075
<ALLOWANCES> (137,000)
<INVENTORY> 1,907,997
<CURRENT-ASSETS> 3,393,536
<PP&E> 944,112
<DEPRECIATION> (670,627)
<TOTAL-ASSETS> 3,717,020
<CURRENT-LIABILITIES> 427,158
<BONDS> 0
0
0
<COMMON> 12,181
<OTHER-SE> 3,277,681
<TOTAL-LIABILITY-AND-EQUITY> 3,717,020
<SALES> 1,713,054
<TOTAL-REVENUES> 1,816,758
<CGS> 850,013
<TOTAL-COSTS> 850,013
<OTHER-EXPENSES> 956,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,955
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,955
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
