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 the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 33-16453
MICRONETICS WIRELESS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2063614
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
26 Hampshire Drive, Hudson NH 03051
(Address of principal executive offices)
(Zip Code)
(603) 883-2900
(Registrant's telephone number, including area code)
MICRONETICS, INC.
(Former name, former address and former fiscal year, if changed
since last report)
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 and 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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
2,872,798 shares of common stock, par value $.01 per share.
Page 1 of 13
There is no Exhibit Index.
<PAGE>
MICRONETICS WIRELESS, INC.
INDEX
Part I. Financial Information Page No.
Item 1. Financial Statements
Condensed Balance Sheets - 3-4
September 30, 1995 and March
31, 1995
Condensed Statements of Operations- 5
Three Months Ended September 30, 1995
and 1994
Condensed Statements of Operations - 6
Six Months Ended September 30, 1995
and 1994
Condensed Statement of Cash Flows - 7
Six Months Ended September 30, 1995
and 1994
Notes to Condensed Financial 8
Statements
Item 2. Management's Discussion and Analysis 9-10
of Financial Condition and
Result of Operations
Part II. Other Information
Item 2. Submission of Matters to a Vote of 12
Security Holders
Item 6. Exhibits and Reports on Form 8-K 12
Signature 13
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
--------------
September 30, March 31,
1995 1995
-----------------------------
<S> <C> <C>
Current assets:
Cash $ 184,954 $ 288,015
Receivables
Trade (net of allowance for
doubtful accounts) 654,545 555,246
Inventories (note 2) 851,570 703,241
Insurance Receivable 596,376 574,662
Prepaid expenses and other
current assets 22,086 24,126
--------- ---------
Total current assets 2,309,531 2,145,290
Property and equipment, net of
accumulated depreciation and
amortization 423,142 426,417
Other assets 130,492 114,209
Deferred Tax Asset 102,000 150,000
--------- ---------
Total assets $2,965,165 $2,835,916
========= =========
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
September 30, March 31,
1995 1995
-----------------------------
<S> <C> <C>
Current liabilities:
Short term loans and capitalized
leases $ 73,432 $ 74,643
Accounts payable 279,901 288,322
Accrued expenses and taxes, other
than income taxes 133,040 134,570
Subordinated Debentures 225,000 0
Deferred Sales 0 19,200
Income taxes payable 5,288 3,973
--------- ---------
Total current liabilities 716,661 520,708
Long Term Debt:
Capitalized leases (less current
maturities included above);
long term debt and accounts payable
not due for at least one year 145,000 180,283
Subordinated Debentures 0 225,000
Shareholder's equity:
Common stock 28,801 28,447
Additional paid - in capital 2,040,955 2,014,784
Retained earnings (deficit) 33,748 (133,306)
---------- ---------
Total shareholder equity 2,103,504 1,909,925
---------- ---------
Total Liabilities and
Shareholders' Equity 2,965,165 $2,835,916
========== =========
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
3 Months Ended September 30,
1995 1994
-------------- ----------
<S> <C> <C>
Operating revenues $ 995,587 $ 701,662
Cost of operations 584,049 505,188
--------- ---------
Gross profit 411,538 196,474
--------- ---------
Selling, general and
administrative expenses 226,749 146,634
Research & Development 48,647
--------- ---------
Operating income 136,142 49,840
Other income (expense):
Interest income 673 2,314
Interest expense (9,949) (10,323)
Other income (646) (500)
--------- ---------
Total (9,922) (8,509)
--------- ---------
Income before provision
for income taxes 126,220 41,331
Provision for income Taxes 23,000 9,400
--------- ---------
Net Income 103,220 31,931
========= =========
Net income per share
$ 0.03 0.01
========= =========
Weighted average number
of shares outstanding 3,037,880 $2,803,168
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
6 Months Ended September 30,
1995 1994
-------------- ----------
<S> <C> <C>
Operating revenues $1,838,250 $1,371,776
Cost of operations 1,080,026 991,801
--------- ---------
Gross profit 758,224 379,975
Selling, general and
administrative expenses 433,770 280,996
Research & Development 89,133
--------- ---------
Operating income 235,321 98,979
Other income (expense):
Interest income 1,394 3,207
Interest expense (20,346) (17,740)
Other income (1,315) 0
--------- ---------
Total (20,267) (14,533)
--------- ---------
Income before provision
for income taxes 215,054 84,446
Provision for income Taxes 44,000 20,500
--------- ---------
Net Income 171,054 63,946
========= =========
Net income per share
$ 0.05 0.02
========= =========
Weighted average number
of shares outstanding 3,165,141 $2,803,168
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
6 Months Ended September 30,
1995 1994
-------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from operating
Activies:
Net income $ 171,054 84,446
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 56,200 47,310
Changes in assets and liabilities:
(increase) in accounts receivable,
prepaid expenses and other current
assets (265,588) (91,761)
(Increase) Decrease in security
deposits and other assets 27,717 (9,980)
(Increase) in insurance receivable (21,714) 0
(Decrease) Increase in accounts
payable accrued liabilities,
notes payable and other current
liabilities (8,636) (5,087)
Increase in Inventory Reserve 20,000
Increase (Decrease) in Deferred
Sales (19,200) 0
--------- ----------
Net cash provided (utilized)
by operating activities $ (40,167) $ 24,928
========= ==========
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
6 Months Ended September 30,
1995 1994
-------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (52,925) $ (22,838)
--------- ---------
Net cash provided (used) by
investment activities (52,925) (22,838)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases (36,494) (35,997)
Proceeds from stock options
exercised 26,525 12,500
Proceeds from issuance of common
stock 0 59,367
Proceeds from issuance of
subordinated convertible
debentures 0 225,000
--------- ---------
Net cash provided (used)
by financing activities (9,969) 260,870
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (103,061) 262,960
Cash and cash equivalents, at
beginning of year 288,015 191,894
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $ 184,954 454,854
========= =========
<PAGE>
MICRONETICS WIRELESS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. In the opinion of the Company, the accompanying
unaudited consolidated condensed financial
statements contain all adjustments (consisting
of only normal recurring adjustments) necessary
to present fairly the financial position as of
September 30, 1995 and 1994, the results of
operations for the three month and six month
periods ended September 30, 1995 and 1994 and
cash flows for the six month periods ended
September 30, 1995 and 1994.
While the Company believes that the disclosures
presented are adequate to make the information
not misleading, it is suggested that these
consolidated condensed financial statements be
read in conjunction with the Company's Annual
Report on Form 10-KSB for its fiscal year ended
March 31, 1995.
The results of operations for the three and six
month periods ended September 30, 1995 are not
necessarily indicative of the results of the
full year.
Note 2. Inventories are summarized below:
September 30, 1995 March 31, 1995
Raw materials and
work-in-process $606,075 $596,095
Finished goods 245,495 107,146
Total $851,570 $703,241
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company had revenues of $995,587 and $701,662 for the three
months ended September 30, 1995 and 1994, respectively, an increase
of 42% compared to the prior period. The Company had net income of
$103,220, or $.03 per share, as compared with net income of $31,931,
or $.01 per share, for the three month periods ended September 30,
1995 and 1994, respectively. This was an increase of 223% compared
to the prior period.
The Company had revenues of $1,838,250 and $1,371,776 for the
six months ended September 30, 1995 and 1994, respectively, an
increase of 33.5% over the prior period. The Company had net income
of 171,054, or $.05 per share, and $63,946, or $.02 per share, for
the six month periods ended September 30, 1995 and 1994,
respectively. This was an increase of 167% compared to the prior
period.
Gross profit as a percent of net sales for the three months
ended September 30, 1995 was 41.3% compared to 28.0% during the
corresponding period of the prior fiscal year. For the six month
periods ended September 30, 1995 and 1994 gross profit as a percent
of net sales was 41.2% and 27.7%, respectively. Selling, general and
administrative expenses ("SGA") as a percent of net sales for the
three months ended September 30, 1995 increased to 22.8% as compared
to 20.9% in the prior year. For the six month period ended September
30, 1995 SGA as a percent of net sales increased to 23.6% from 20.5%
in the year earlier period. These increases in SGA were due to the
development of the Company's new MicroSource and MicroCal product
lines and the significant increase in marketing expenses.
Financial Condition
The Company's working capital at September 30, 1995 was
$1,592,870. It was $1,624,582 at March 31, 1995. The Company's
current ratio was 3.22 to 1 at September 30, 1995, as compared to
4.12 to 1 at March 31, 1995. The Company reclassified to short-term
debt $225,000 of Convertible Debenture due in April 1996.
The Company used cash for operating activities in the amount of
$52,925 during the six months ended September 30, 1995 as compared to
generating $24,928 in the year earlier period. This was largely due
to increases in accounts receivable and inventory to support
increased sales. The Company purchased $52,925 of new equipment
during the six months ended September 30, 1995, as compared to a
$22,838 a year ago. Largely due to the private sale of securities by
the Company of approximately $285,000, the Company generated $260,870
of cash from financing activities during the six months ended
September 30, 1994, as compared to a use of $9,969 related to
financing activities during the current period. As a result, the
Company's cash and cash equivalents declined from $288,015 at March
31, 1995 to $184,954 at September 30, 1995.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Submission of Matters to a Vote of Security Holders
On September 19, 1995, at the Company's Annual Meeting of
Shareholders, the Company's shareholders elected management's slate
of directors, which included Messrs. Richard S. Kalin, David Siegel
and Roy L. Boe. Each nominee received 1,849,264 votes for and 7,900
votes against. At this meeting, two resolutions authorizing
amendments to the Company's Certificate of Incorporation were
approved. The first resolution to amend the Company's Certificate of
Incorporation to change the Company's name to Micronetics Wireless,
Inc. was approved 1,849,344 votes for and 4,720 votes against. The
second resolution to amend the Company's Certificate of Incorporation
to increase the number of authorized shares of common stock to
10,000,000 was also approved. It was approved by a vote of 1,773,969
votes for and 20,640 votes against. Finally, the Company's
shareholders approved the Company's 1994 Stock Option Plan by a vote
of 1,118,382 votes for and 23,900 votes against.
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended September 30, 1995, the registrant
did not file any reports on Form 8-K.
<PAGE>
SIGNATURE
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.
MICRONETICS WIRELESS, INC.
Dated: November 8, 1995 s/Richard S. Kalin
Richard S. Kalin
President
MICRONET\10q-sep.95
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 184,954
<SECURITIES> 0
<RECEIVABLES> 654,545
<ALLOWANCES> 0
<INVENTORY> 851,570
<CURRENT-ASSETS> 2,309,531
<PP&E> 423,142
<DEPRECIATION> 56,200
<TOTAL-ASSETS> 2,965,165
<CURRENT-LIABILITIES> 716,661
<BONDS> 0
<COMMON> 28,801
0
0
<OTHER-SE> 2,103,504
<TOTAL-LIABILITY-AND-EQUITY> 2,965,165
<SALES> 1,838,250
<TOTAL-REVENUES> 1,838,250
<CGS> 1,080,026
<TOTAL-COSTS> 433,770
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,952
<INCOME-PRETAX> 215,054
<INCOME-TAX> 44,000
<INCOME-CONTINUING> 215,054
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 171,054
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
