<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 April 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-15486
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MIKRON INSTRUMENT COMPANY, INC.
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(Exact Name of Registrant as Specified in its Charter)
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NEW JERSEY 22-1895668
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
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16 Thornton Road, Oakland, New Jersey 07436
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(Address of Principal Executive Office) (Zip Code)
(201) 405-0900
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(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
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The number of shares of registrant's Common Stock, $.003 par value,
outstanding as of April 30, 1998 was 3,654,200 shares.
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MIKRON INSTRUMENT COMPANY, INC.
INDEX
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<CAPTION>
Page No.
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PART I - FINANCIAL INFORMATION:
Balance Sheet - April 30, 1998 1
Statement of Operations - Three months and six months ended
April 30, 1998 and 1997 2
Statement of Cash Flows - Six months ended April 30, 1998
and 1997 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
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MIKRON INSTRUMENT COMPANY, INC.
BALANCE SHEET
(Unaudited)
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<CAPTION>
April 30,
1998
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ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 299,281
Trade accounts receivable, less allowance for
doubtful accounts of $83,000 1,344,758
Inventories 2,141,460
Prepaid expenses and other current assets 135,537
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TOTAL CURRENT ASSETS 3,921,036
PROPERTY AND EQUIPMENT, net 262,937
OTHER ASSETS 12,500
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$ 4,196,473
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 420,105
Current portion of capital lease obligation 3,782
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TOTAL CURRENT LIABILITIES 423,887
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CAPITAL LEASE OBLIGATION 8,990
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STOCKHOLDERS' EQUITY
Common stock, $.003 par value;
authorized - 15,000,000 shares; issued and outstanding
3,654,200 shares. 12,181
Additional paid-in capital 3,151,831
Retained earnings 599,584
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TOTAL STOCKHOLDERS' EQUITY 3,763,596
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$ 4,196,473
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See notes to financial statements
F-1
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MIKRON INSTRUMENT COMPANY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
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1998 1997 1998 1997
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REVENUES:
Net sales $ 2,283,596 $ 1,681,520 $ 4,459,323 $ 3,304,371
Royalties 54,873 29,076 96,541 60,414
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TOTAL REVENUES 2,338,469 1,710,596 4,555,864 3,364,785
------------ ------------ ------------ -----------
COSTS AND EXPENSES:
Cost of goods sold 1,069,510 757,836 2,079,044 1,591,293
Selling, general and administrative 952,391 815,197 1,774,004 1,615,092
Research and development 199,350 155,594 355,069 323,342
------------ ------------ ------------ -----------
TOTAL COSTS AND EXPENSES 2,221,251 1,728,627 4,208,117 3,529,727
------------ ------------ ------------ -----------
INCOME (LOSS) FROM OPERATIONS 117,218 (18,031) 347,747 (164,942)
------------ ------------ ------------ -----------
OTHER INCOME:
Investment and interest income 6,052 206 7,854 607
------------ ------------ ------------ -----------
NET INCOME (LOSS) $ 123,270 $ (17,825) $ 355,601 $ (164,335)
============ ============ ============ ===========
NET INCOME (LOSS) PER SHARE $ 0.03 $ (0.00) $ 0.10 $ (0.04)
============ ============ ============ ===========
WEIGHTED AVERAGE NUMBER OF SHARES 3,654,200 3,654,200 3,654,200 3,654,200
============ ============ ============ ===========
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See notes to financial statements
F-2
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MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
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<CAPTION>
Six Months Ended
April 30,
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 355,601 $ (164,335)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 31,525 28,524
Amortization 25,000 25,000
Changes in assets and liabilities:
(Increase) decrease in trade accounts receivable (433,923) 187,702
(Increase) decrease in inventories 116,987 239,831
(Increase) decrease in prepaid and other current assets (46,825) (26,403)
(Decrease) increase in accounts payable and accrued liabilities (272,839) (63,657)
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(580,075) 390,997
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (224,474) 226,662
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (22,437) (19,287)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term notes payable - (100,000)
Decrease in long-term debt (1,803) (26,584)
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NET CASH USED IN FINANCING ACTIVITIES (1,803) (126,584)
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (248,714) 80,791
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 547,995 206,364
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 299,281 $ 287,155
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See notes to financial statements
F-3
<PAGE> 6
MIKRON INSTRUMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
(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, 1997 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.
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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, 1998 were $2,284,000
as compared to net sales of $1,682,000 for the quarter ended April 30,
1997. The cost of sales as a percentage of net sales for the 1998
period was 47% as compared to 45% for the comparable 1997 period.
Net sales for the six months ended April 30, 1998 were $4,459,000 as
compared to net sales of $3,304,000 for the six months ended April 30,
1997. The cost of sales as a percentage of net sales for the six
months ended April 30, 1998 was 47% as compared to 48% for the
comparable 1997 period. The increase in cost of sales as a percentage
of net sales for the three months ended April 30, 1998 was due to a
decrease in the markup on the Company's new product line. The decrease
in the six months ended April 30, 1998 was due to decrease in wages
and overtime.
Selling, general and administrative expenses for the three and
six month periods ended April 30, 1998 were $952,000 and $1,774,000
as compared to $815,000 and $1,615,000 for the respective 1997
periods. The increase in the three month period ended April 30, 1998
was due to additional costs of advertising, trade shows and sales
commissions.
Research and development expenses for the quarter ended April
30, 1998 were $199,000 as compared to $156,000 for the quarter ended
April 30, 1997. As for the six months ended April 30, 1998, research
and development expenses were $355,000 as compared to $323,000 for the
six months ended April 30, 1997. The increases in the three and six
month periods ended April 30, 1998 over the comparable 1997 periods
are attributable to the Company's efforts to develop new infrared
thermometers and hiring of additional personnel for the research and
development department.
Other income for the quarter ended April 30, 1998 was $61,000
as compared to $29,000 for the quarter ended April 30, 1997. This
represents $55,000 of royalty income and $6,000 of other investment
income for the quarter ended April 30, 1998, compared to $29,000 of
royalty income and $200 of investment income for the quarter ended
April 30, 1997. As for the six months ended April 30, 1998, other
income was $104,000, as compared to $61,000 for the six months ended
April 30, 1997. This represents $97,000 of royalty income and $8,000
of other investment income for the six months ended April 30, 1998,
compared to $60,000 of royalty income and $1,000 of investment income
for the six months ended April 30, 1997.
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b. Material Change in Financial Condition, Liquidity and Capital Resources
The Company's working capital increased from $3,109,000 at
October 31, 1997 to $3,497,000 at April 30, 1998.
At April 30, 1998, the Company's capital resources and its
sources of liquidity was $299,000 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.
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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
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<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.
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Keikhosrow Irani, President, as
Registrant's duly authorized officer
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Alex Wu, Treasurer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT APRIL 30, 1998 AND THE STATEMENT OF OPERATIONS FOR THE PERIOD ENDED
APRIL 30, 1998 AS INCLUDED IN THIS FORM 10 QSR FOR THE PERIOD ENDED APRIL 30,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 299,281
<SECURITIES> 0
<RECEIVABLES> 1,427,575
<ALLOWANCES> (82,817)
<INVENTORY> 2,141,460
<CURRENT-ASSETS> 3,921,036
<PP&E> 980,096
<DEPRECIATION> (717,159)
<TOTAL-ASSETS> 4,196,473
<CURRENT-LIABILITIES> 423,887
<BONDS> 8,990
0
0
<COMMON> 12,181
<OTHER-SE> 3,751,415
<TOTAL-LIABILITY-AND-EQUITY> 4,196,473
<SALES> 2,283,596
<TOTAL-REVENUES> 2,338,469
<CGS> 1,069,510
<TOTAL-COSTS> 2,221,251
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 123,270
<INCOME-TAX> 0
<INCOME-CONTINUING> 123,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 123,270
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
