<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, 1998
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
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MIKRON INSTRUMENT COMPANY, INC.
--------------------------------
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-1895668
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
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
------ ------
The number of shares of registrant's Common Stock, $.003 par value,
outstanding as of July 31, 1998 was 3,654,200 shares.
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MIKRON INSTRUMENT COMPANY, INC.
<TABLE>
<CAPTION>
INDEX
Page No.
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PART I - FINANCIAL INFORMATION:
<S> <C>
Balance Sheet - July 31, 1998 1
Statement of Operations - Three months and nine months
ended July 31, 1998 and 1997 2
Statement of Cash Flows - Three months and nine months
ended July 31, 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
</TABLE>
<PAGE> 3
MIKRON INSTRUMENT COMPANY, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
July 31,
1998
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ASSETS
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 236,482
Trade accounts receivable, less allowance for
doubtful accounts of $83,000 1,128,046
Inventories 2,139,308
Prepaid expenses and other current assets 103,468
----------
TOTAL CURRENT ASSETS 3,607,304
PROPERTY AND EQUIPMENT, net 273,256
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$3,880,560
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
(Accounts payable and accrued liabilities $ 351,781
Current portion of capital lease obligation 3,782
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TOTAL CURRENT LIABILITIES 355,563
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CAPITAL LEASE OBLIGATION 8,039
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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 352,946
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TOTAL STOCKHOLDERS' EQUITY 3,516,958
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$3,880,560
==========
</TABLE>
See notes to financial statements
F-1
<PAGE> 4
MIKRON INSTRUMENT COMPANY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
July 31, July 31,
------------------------------ -----------------------------
1998 1997 1998 1997
------------------------------ -----------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 1,817,400 $ 1,713,054 $ 6,276,723 $ 5,017,425
Royalties 48,000 101,778 144,541 162,192
----------- ----------- ----------- -----------
TOTAL REVENUES 1,865,400 1,814,832 6,421,264 5,179,617
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of goods sold 974,434 850,013 3,053,477 2,441,306
Selling, general and administrative 923,057 788,903 2,697,062 2,403,995
Research and development 221,676 167,887 576,745 491,229
----------- ----------- ----------- -----------
TOTAL COSTS AND EXPENSES 2,119,167 1,806,803 6,327,284 5,336,530
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (253,767) 8,029 93,980 (156,913)
----------- ----------- ----------- -----------
OTHER INCOME:
Investment and interest income 7,130 1,926 14,984 2,533
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (246,637) $ 9,955 $ 108,964 $ (154,380)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE $ (0.07) $ 0.00 $ 0.03 $ (0.04)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES 3,654,200 3,684,890 3,654,200 3,684,890
=========== =========== =========== ===========
</TABLE>
See notes to financial statements
F-2
<PAGE> 5
MIKRON INSTRUMENT COMPANY, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
July 31,
--------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 108,964 $(154,384)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 48,249 43,078
Amortization 37,500 37,500
Changes in assets and liabilities:
(Increase) decrease in trade accounts receivable (217,211) 167,701
(Increase) decrease in inventories 119,139 347,280
(Increase) decrease in prepaid and other current assets (14,756) (18,500)
(Decrease) increase in accounts payable and accrued liabilities (341,164) (87,899)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (259,279) 334,776
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (49,480) (23,445)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of short-term notes payable - (100,000)
Decrease in long-term debt - (87,500)
Decrease in capital lease obligation (2,754) (17,568)
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NET CASH USED IN FINANCING ACTIVITIES (2,754) (205,068)
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NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (311,513) 106,263
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 547,995 206,364
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CASH AND CASH EQUIVALENTS - END OF PERIOD $ 236,482 $ 312,627
========= =========
</TABLE>
See notes to financial statements
F-3
<PAGE> 6
MIKRON INSTRUMENT COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
JULY 31, 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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<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, 1998 were $1,817,000 as
compared to net sales of $1,713,000 for the quarter ended July 31, 1997.
The cost of sales as a percentage of net sales for the 1998 period was 54%
as compared to 50% for the comparable 1997 period. Net sales for the nine
months ended July 31, 1998 were $6,277,000 as compared to net sales of
$5,017,000 for the nine months ended July 31, 1997. The cost of sales as a
percentage of net sales for the nine months ended July 31, 1998 and 1997
was 49%. The increase in cost of sales as a percentage of net sales for
the three months ended July 31, 1998 was due to lower margin in products
sold in this period.
Selling, general and administrative expenses for the three and nine
month periods ended July 31, 1998 were $923,000 and $2,697,000 as compared
to $789,000 and $2,404,000 for the respective 1997 periods. The increase
in the three month period ended July 31, 1998 was due to increased
expenditures on sales advertising and marketing.
Research and development expenses for the quarter ended July 31,
1998 were $222,000 as compared to $168,000 for the quarter ended July 31,
1997. As for the nine months ended July 31, 1998, research and development
expenses were $577,000 as compared to $491,000 for the nine months ended
July 31, 1997. The increases in the three and nine month periods ended
July 31, 1998 over the comparable 1997 periods are attributable to the
addition of personnel and outside consultants in this division.
Other income for the quarter ended July 31, 1998 was $55,000 as
compared to $104,000 for the quarter ended July 31, 1997. This represents
$48,000 of royalty income and $7,000 of investment income for the quarter
ended July 31, 1998, compared to $102,000 of royalty income and $2,000 of
investment income for the quarter ended July 31, 1997. As for the nine
months ended July 31, 1998, it was $159,000 as compared to $165,000 for
the nine months ended July 31, 1997. This represents $144,000 of royalty
income and $15,000 of investment income for the nine months ended July 31,
1998, compared to $162,000 of royalty income and $3,000 of investment
income for the nine months ended July 31, 1997.
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<PAGE> 8
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 $3,252,000 at July 31, 1998.
At July 31, 1998, the Company's capital resources and its sources of
liquidity was $236,482 in cash and temporary cash investments and accounts
receivable of $1,128,046.
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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<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
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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
----------------------------------
Alex Wu, Treasurer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT JULY 31, 1998 AND THE STATEMENT OF OPERATIONS FOR THE PERIOD
ENDED JULY 31, 1998. AS INCLUDED IN THIS FORM 10 QSB FOR THE PERIOD ENDED JULY
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> MAY-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 236,482
<SECURITIES> 0
<RECEIVABLES> 1,211,046
<ALLOWANCES> (83,000)
<INVENTORY> 2,139,308
<CURRENT-ASSETS> 3,607,304
<PP&E> 1,007,138
<DEPRECIATION> (733,883)
<TOTAL-ASSETS> 3,880,560
<CURRENT-LIABILITIES> 355,563
<BONDS> 8,039
0
0
<COMMON> 12,181
<OTHER-SE> 3,504,777
<TOTAL-LIABILITY-AND-EQUITY> 3,880,560
<SALES> 6,276,723
<TOTAL-REVENUES> 6,421,264
<CGS> 3,053,477
<TOTAL-COSTS> 6,327,284
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 108,964
<INCOME-TAX> 0
<INCOME-CONTINUING> 108,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,964
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
