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, 1996
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)
(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.
3,141,438 shares of common stock, par value $.01 per share.
Page 1 of 12
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, 1996 and March
31, 1996
Condensed Statements of Operations- 5
Three Months Ended September 30, 1996
and 1995
Condensed Statements of Operations - 6
Six Months Ended September 30, 1996
and 1995
Condensed Statement of Cash Flows - 7-8
Six Months Ended September 30, 1996
and 1995
Notes to Condensed Financial 9
Statements
Item 2. Management's Discussion and Analysis 10
of Financial Condition and
Result of Operations
Part II. Other Information
Item 2. Submission of Matters to a Vote of 11
Security Holders
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
--------------
September 30, March 31,
1996 1996
-----------------------------
<S> <C> <C>
Current assets:
Cash $1,077,929 $ 146,674
Receivables
Trade (net of allowance for
doubtful accounts) 622,354 688,828
Inventories (note 2) 872,765 834,209
Insurance receivable 0 596,376
Prepaid expenses and other
current assets 21,267 23,793
Deferred tax asset 25,000 25,000
--------- ---------
Total current assets 2,619,315 2,314,880
Fixed assets:
Land 162,000 162,000
Building & improvements 843,547 840,247
Furniture, fixtures and
equipment 1,031,514 988,624
Capitalized leases 102,535 102,535
--------- ---------
Gross fixed assets 2,139,596 2,093,406
Accumulated depreciation and (732,801) (674,128)
amortization --------- ---------
Total (net) fixed assets 1,406,795 1,419,278
Other assets:
Deposits 6,216 5,086
Intangibles (net of amortization) 104,132 109,814
Deferred tax asset 81,390 151,391
-------- --------
Total other assets 191,738 266,291
-------- --------
Total assets $4,217,848 $4,000,449
========= =========
<PAGE>
MICRONETICS WIRELESS, INC.
<CAPTION>
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
September 30, March 31,
1996 1996
-----------------------------
<S> <C> <C>
Current liabilities:
Short term loans and capitalized
leases $ 92,507 $ 90,982
Accounts payable 187,767 218,046
Accrued expenses and taxes, other
than income taxes 162,166 148,455
Subordinated debentures 25,000 25,000
Deferred sales 6,066 0
Income taxes payable 5,762 3,815
--------- ---------
Total current liabilities 479,268 486,298
Long term debt:
Capitalized leases 0 7,978
Notes payable - bank 899,827 947,089
--------- ---------
Total long-term debt 899,827 955,067
Shareholders' equity:
Common stock 31,174 31,168
Additional paid - in capital 2,336,522 2,335,530
Retained earnings 471,057 192,388
---------- ---------
Total shareholders' equity 2,838,753 2,559,084
---------- ---------
Total liabilities and
shareholders' equity $4,217,848 $4,000,449
========== =========
<CAPTION>
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
3 Months Ended September 30,
1996 1995
-------------- ----------
<S> <C> <C>
Operating revenues $ 935,202 $ 995,587
Cost of operations 524,227 584,049
--------- ---------
Gross profit 410,975 411,538
--------- ---------
Selling, general and
administrative expenses 223,424 226,749
Research & development 46,048 48,647
expense --------- ---------
Operating income 141,503 136,142
Other income (expense):
Rental income 15,063 0
Interest income 1,726 673
Interest (expense) (23,144) (9,949)
Other income (expense) (2,318) (646)
--------- ---------
Total (8,673) (9,922)
--------- ---------
Income before taxes and
extraordinary items 132,830 126,220
Provision for income taxes 24,800 23,000
--------- ---------
Income before extraordinary
item $108,030 $103,220
--------- ---------
Extraordinary item --
insurance settlement 98,566 0
--------- ---------
Net income 206,596 103,220
========= =========
Net income per share
Before extraordinary item $ 0.03 0 .03
Extraordinary item 0.03 0 .00
--------- ---------
Net income per share $ 0.06 0.03
========= =========
Weighted average number
of shares outstanding 3,268,858 3,037,880
========= =========
<CAPTION>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
6 Months Ended September 30,
1996 1995
-------------- ----------
<S> <C> <C>
Operating revenues $1,784,049 $1,838,250
Cost of operations 1,005,728 1,080,026
--------- ---------
Gross profit 778,321 758,224
Selling, general and
administrative expenses 443,621 433,770
Research & development expense 90,106 89,133
--------- ---------
Operating income 244,594 235,321
Other income (expense):
Rental income 30,125 0
Interest income 2,377 1,394
Interest (expense) (46,423) (20,346)
Other income (expense) (4,571) (1,315)
--------- ---------
Total (18,492) (20,267)
--------- ---------
Income before taxes and
extraordinary item 226,102 215,054
Provision for income taxes 46,000 44,000
--------- ---------
Income before extraordinary
item 180,102 171,054
Extraordinary item --
Insurance settlement 98,566 0
--------- ---------
Net income 278,668 171,054
========= =========
Net income per share
Before extraordinary item 0.06 0.05
Extraordinary item $ 0.03 0.00
--------- ---------
Net income per share $ 0.09 $ 0.05
========= =========
Weighted average number
of shares outstanding 3,268,858 3,165,141
========= =========
<PAGE>
<CAPTION>
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
6 Months Ended September 30,
1996 1995
-------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from operating
Activities:
Net income $ 278,668 171,054
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in deferred tax asset 70,000 0
Depreciation and amortization 64,614 56,200
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets 30,445 (265,588)
(Increase) decrease in security
deposits and other assets (1,130) 27,717
(Increase) decrease in insurance
receivable 596,376 (21,714)
Increase in inventory reserve 0 20,000
(Decrease) increase in accounts
payable accrued liabilities,
notes payable and other current
liabilities (14,879) (8,636)
Increase (decrease) in deferred
sales 6,066 (19,200)
--------- ----------
Net cash provided (utilized)
by operating activities $1,030,160 $ (40,167)
--------- ----------
<PAGE>
<CAPTION>
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
6 Months Ended September 30,
1996 1995
-------------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (46,190) $ (52,925)
--------- ---------
Net cash provided (used) by
investment activities (46,190) (52,925)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases 53,715 (36,494)
Proceeds from stock options
exercised 1,000 26,525
Proceeds from issuance of common
stock 0 0
Proceeds from issuance of
subordinated convertible
debentures 0 0
--------- ---------
Net cash provided (used)
by financing activities (52,715) (9,969)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 931,255 (103,061)
Cash and cash equivalents, at
beginning of year 146,674 288,015
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $1,077,929 $ 184,954
========= =========
</TABLE>
<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, 1996 and 1995, the results of
operations for the three month and six month
periods ended September 30, 1996 and 1995 and
cash flows for the six month periods ended
September 30, 1996 and 1995.
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, 1996.
The results of operations for the three and six
month periods ended September 30, 1996 are not
necessarily indicative of the results of the
full year.
Note 2. Inventories are summarized below:
September 30, 1996 March 31, 1996
Raw materials and
work-in-process $627,115 $649,657
Finished goods 245,650 184,552
Total $872,765 $834,209
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company had revenues of $935,202 and $995,587 for the three
months ended September 30, 1996 and 1995, respectively, a decrease of
6% compared to the prior period. The Company had net income of
$206,596 or $.06 per share, as compared with net income of $103,220
or $.03 per share, for the three month periods ended September 30,
1996 and 1995, respectively.
The Company had revenues of $1,784,049 and $1,838,250 for the
six months ended September 30, 1996 and 1995, respectively, a
decrease of 3% over the prior period. The Company had net income of
$278,668 or $.09 per share, and $171,054 or $.05 per share, for the
six month periods ended September 30, 1996 and 1995, respectively.
During the three and six month periods ended September 30, 1996,
the Company had extraordinary income from an insurance settlement of
$98,566 or $.03 per share.
Gross profit as a percent of net sales for the three months
ended September 30, 1996 was 43.9% compared to 41.3% during the
corresponding period of the prior fiscal year. For the six month
periods ended September 30, 1996 and 1995 gross profit as a percent
of net sales was 43.6% and 41.2% respectively. Selling, general and
administrative expenses ("SGA") as a percent of net sales for the
three months ended September 30, 1996 increased to 23.9% as compared
to 22.8% in the prior year. For the six month period ended September
30, 1996, SGA as a percent of net sales increased to 24.9% from 23.6%
in the year earlier period. These increases in SGA were due to the
development and introduction of the Company's new equipment product
lines and the significant increase in marketing expenses.
Financial Condition
The Company's working capital at September 30, 1996 was
$2,140,047. It was $1,828,582 at March 31, 1996. The Company's
current ratio was 5.47 to 1 at September 30, 1996, as compared to
4.76 to 1 at March 31, 1996.
The Company generated cash from operating activities in the
amount of $1,030,160 during the six months ended September 30, 1996
as compared to using $40,167 in the year earlier period. This was
largely due to the insurance settlement and net income. The Company
purchased $46,190 of new equipment during the six months ended
September 30, 1996, as compared to $52,925 a year ago. The Company
used $52,715 from financing activities during the six months ended
September 30, 1996, as compared to a use of $9,969 related to
financing activities during the year earlier period. As a result,
the Company's cash and cash equivalents increased from $146,674 at
March 31, 1996 to $1,077,929 at September 30, 1996.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Submission of Matters to a Vote of Security Holders
On September 17, 1996, 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,
Roy L. Boe and Ms. Barbara Meirisch. Mr. Kalin received 1,900,421
votes for and 7,180 against. Mr. Siegel received 1,903,521 votes for
and 4,080 against. Mr. Boe received 1,902,121 votes for and 5,480
votes against. Ms. Meirisch received 1,903,621 votes for and 3,980
votes against. Finally, the Company's shareholders approved the
Company's 1996 Stock Option Plan by a vote of 926,521 votes for and
37,332 votes against.
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended September 30, 1996, 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 4, 1996 s/Richard S. Kalin
Richard S. Kalin,
President and Chief
Financial Officer
MICRONET\10q-sep.96
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 1,077,929
<SECURITIES> 0
<RECEIVABLES> 622,354
<ALLOWANCES> 0
<INVENTORY> 872,765
<CURRENT-ASSETS> 2,619,315
<PP&E> 1,031,514
<DEPRECIATION> 732,801
<TOTAL-ASSETS> 4,217,848
<CURRENT-LIABILITIES> 479,268
<BONDS> 0
0
0
<COMMON> 31,174
<OTHER-SE> 2,807,579
<TOTAL-LIABILITY-AND-EQUITY> 4,217,848
<SALES> 935,202
<TOTAL-REVENUES> 935,202
<CGS> 524,227
<TOTAL-COSTS> 223,424
<OTHER-EXPENSES> 2,318
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,144
<INCOME-PRETAX> 132,830
<INCOME-TAX> 24,800
<INCOME-CONTINUING> 132,830
<DISCONTINUED> 0
<EXTRAORDINARY> 98,566
<CHANGES> 0
<NET-INCOME> 206,596
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
