UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 0-17966
MICRONETICS WIRELESS, INC.
(Exact name of small business issuer 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)
(603) 883-2900
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed
since last report)
The number of shares outstanding of the issuer's common
stock par value $.01 per share, as of October 16, 2000 was
4,058,692.
Transitional Small Business Disclosure Format (check one):
Yes No X
Page 1 of 13
There is no Exhibit Index.
MICRONETICS WIRELESS, INC.
INDEX
Part I. Financial Information: Page No.
Item 1. Financial Statements.
Condensed Balance Sheets - 3-4
September 30, 2000 and March
31, 2000
Condensed Statements of Operations- 5
Three Months Ended September 30, 2000
and 1999
Condensed Statements of Operations - 6
Six Months Ended September 30, 2000
and 1999
Condensed Statements of Cash Flows - 7-8
Six Months Ended September 30, 2000
and 1999
Notes to Condensed Financial 9
Statements
Item 2. Management's Discussion and Analysis 10-11
or Plan of Operation.
Part II. Other Information:
Item 2. Changes in Securities 12
Item 4. Submission of Matters to a Vote of
Security Holders. 12
Item 6. Exhibits and Reports on Form 8-K. 12
Signature 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
September 30, March 31,
2000 2000
Current assets:
Cash $1,480,660 $1,424,988
Receivables
Trade (net of allowance for
doubtful accounts) 1,343,999 1,007,134
Inventories (note 2) 2,294,352 2,082,964
Prepaid expenses and other
current assets 115,906 52,553
Deferred tax asset 138,084 185,222
Other current assets 70,438 67,911
Total current assets 5,443,439 4,820,772
Fixed assets:
Land 162,000 162,000
Building & improvements 864,554 855,969
Furniture, fixtures and
equipment 2,104,519 2,026,007
Capitalized leases 260,266 143,703
Gross fixed assets 3,391,339 3,187,679
Accumulated depreciation and
amortization 1,702,830 1,591,111
Total (net) fixed assets 1,688,509 1,596,568
Other assets:
Deposits 4,488 4,488
Intangibles (net of amortization) 116,591 122,378
Goodwill 328,945 328,945
Total other assets 450,024 455,811
Total assets $7,581,972 $6,873,151
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
September 30, March 31,
2000 2000
Current liabilities:
Short-term loans and capitalized
leases $ 205,312 $ 203,287
Accounts payable 310,368 366,104
Accrued expenses and taxes, other
than income taxes 214,299 166,199
Income taxes payable 37,236 7,389
Total current liabilities 767,215 742,979
Long term debt:
Notes payable - bank
and capitalized leases 778,245 703,362
Total long-term debt 778,245 703,362
Shareholders' equity:
Common stock 40,587 39,419
Additional paid - in capital 3,578,872 3,356,870
Retained earnings 2,417,053 2,030,521
Total shareholders' equity 6,036,512 5,426,810
Total liabilities and
shareholders' equity $7,581,972 $6,873,151
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30,
2000 1999
Operating revenues $1,996,032 $1,486,615
Cost of operations 1,156,265 853,001
Gross profit 839,767 633,614
Selling, general and
administrative expenses 459,560 423,807
Research & development
expense 44,812 43,216
Operating income 335,395 165,591
Other income (expense):
Rental income 18,313 16,050
Interest income 10,659 8,722
Interest (expense) (22,873) (19,120)
Other income (expense) (23,120) 6,329
Total (17,020) 11,981
Income before taxes 318,375 178,572
Provision for income taxes 61,905 24,000
Net income $ 256,470 $ 154,572
Net income per share $ 0.06 $ 0.04
Weighted average number
of shares outstanding 3,950,000 3,744,380
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended September 30,
2000 1999
Operating revenues $3,494,854 $2,829,531
Cost of operations 2,102,464 1,670,237
Gross profit 1,392,390 1,159,294
Selling, general and
administrative expenses 805,507 780,958
Research & development expense 107,273 73,345
Operating income 479,610 304,991
Other income (expense):
Rental income 39,713 32,100
Interest income 22,459 17,702
Interest (expense) (38,129) (38,511)
Other income (expense) (32,267) 12,231
Total (8,224) 23,522
Income before taxes 471,386 328,513
Provision for income taxes 84,855 74,000
Net income $ 386,531 $ 254,513
Net income per share $ 0.10 $ 0.07
Weighted average number
of shares outstanding 3,950,000 3,744,380
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended September 30,
2000 1999
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Operating
Activities:
Net income $386,532 $254,513
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in deferred tax asset 47,138 18,102
Depreciation and amortization 119,666 116,079
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (616,293) (479,022)
(Increase) decrease in security
deposits - 765
(Decrease) increase in accounts
payable accrued liabilities,
notes payable and other current
liabilities 24,326 106,409
Net cash provided (utilized)
by operating activities $ (38,631) $ 16,846
<PAGE>
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (CONT.)
(UNAUDITED)
Six Months Ended September 30,
2000 1999
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (203,660) $ (106,432)
Net cash provided (used) by
investment activities (203,660) (106,432)
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases 74,883 (91,502)
Proceeds from stock options
exercised 223,170 41,562
Purchase of treasury stock - (111,618)
Net cash provided (used)
by financing activities 298,053 (161,558)
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 55,672 (251,144)
Cash and cash equivalents, at
beginning of year 1,424,988 1,164,661
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $1,480,660 $ 913,517
<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, 2000 and 1999, the results of
operations for the three month and six month
periods ended September 30, 2000 and 1999 and cash
flows for the six month periods ended September
30, 2000 and 1999.
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, 2000.
The results of operations for the three and six
month periods ended September 30, 2000 are not
necessarily indicative of the results of the full
year.
Note 2. Inventories are summarized below:
September 30, 2000 March 31, 2000
Raw materials and
work-in-process $2,087,498 $1,882,992
Finished goods 206,854 199,972
Total $2,294,352 $2,082,964
Item 2. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
The Company had revenues of $1,966,032 and $1,486,615 for the
three months ended September 30, 2000 and 1999, respectively, an
increase of $509,417 or 34% compared to the prior period. This was
largely due to growth in the Equipment and VCO Products Divisions.
The Company had net income of $256,470 or $.06 per share, as
compared with net income of $154,572 or $.04 per share, for the
three month periods ended September 30, 2000 and 1999,
respectively, an increase of $101,898 or 66%.
The Company had revenues of $3,494,854 and $2,829,531 for the
six months ended September 30, 2000 and 1999, respectively, an
increase of $665,323 or 23% over the prior period. This was
largely due to growth in the Equipment and VCO Products Divisions
offset partially by a modest decline in its Components Division
(which occurred largely in the first quarter while we were in the
process of transferring to manufacturing more complex microwave
integrated subassemblies). The Company had net income of $386,531
or $.10 per share, and $254,513 or $.07 per share, for the six
month periods ended September 30, 2000 and 1999, respectively, an
increase of $132,018 or 51%.
Gross profit as a percent of net sales for the three months
ended September 30, 2000 was 42.1% compared to 42.6% during the
corresponding period of the prior fiscal year. For the six month
periods ended September 30, 2000 and 1999, gross profit as a
percent of net sales was 39.8% and 41.0%, respectively. Selling,
general and administrative expenses ("SG&A") as a percent of net
sales for the three months ended September 30, 2000 decreased to
23.0% as compared to 28.5% in the prior year. For the six month
period ended September 30, 2000, SG&A as a percent of net sales
decreased to 23.0% from 27.6% in the year earlier period. SG&A
expenses as a percent of net sales decreased during the current
periods primarily due to allocating SG&A expenses against a larger
sales base. Research and development expenses ("R&D") as a percent
of net sales decreased to 2.2% during the three month period ended
September 30, 2000 as compared to 2.9% in the year earlier period.
R&D expenses as a percent of net sales increased to 3.1% during the
six month period ended September 30, 2000 as compared to 2.6% in
the prior year period.
Financial Condition
The Company's working capital at September 30, 2000 was
$4,676,000. It was $4,078,000 at March 31, 2000. The Company's
current ratio was 7.1 to 1.0 at September 30, 2000, as compared to
6.5 to 1.0 at March 31, 2000.
The Company used cash from operating activities in the amount
of $38,631 during the six months ended September 30, 2000 as
compared to generating cash in the amount of $16,846 in the year
earlier period. The Company purchased $203,660 of new equipment
and improvements to its headquarters facility and its new facility
for its VCO Products Division, during the six months ended
September 30, 2000, as compared to $106,432 in the year ago period.
The Company provided $298,053 from financing activities during the
six months ended September 30, 2000, as compared to a use of
$161,558 related to the year earlier period. During the current
period, the Company increased debt to purchase equipment and
received proceeds from the exercise of stock options; in the year
ago period, the Company reduced debt and purchased treasury shares.
As a result, the Company's cash and cash equivalents increased from
$1,424,988 at March 31, 2000 to $1,480,660 at September 30, 2000.
Safe Harbor Statement
Statements which are not historical facts, including
statements about the Company's confidence and strategies and its
expectations about new and existing products, technologies and
opportunities, market and industry segment growth, demand and
acceptance of new and existing products are forward looking
statements that involve risks and uncertainties. These include,
but are not limited to, product demand and market acceptance risks;
the impact of competitive products and pricing; the results of
financing efforts; the loss of any significant customers of any
business; the effect of the Company's accounting policies; the
effects of economic conditions and trade, legal, social, and
economic risks, such as import, licensing, and trade restrictions;
the results of the Company's business plan and the impact on the
Company of its relationship with its lender.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
On September 20, 2000, the Company issued 50,000 shares of
Common Stock to an executive officer of the Company upon exercise
of a non-incentive stock option previously granted.
Item 4. Submission of Matters to a Vote of Security Holders.
On September 7, 2000, the Company held its Annual Meeting of
Shareholders (the Meeting"). Three matters were voted upon at the
Meeting. The first matter was the election of three directors.
All of the nominees were elected. The second matter was a proposal
to approve an amendment of the Company's Certificate of
Incorporation to increase the number of shares of Common Stock
authorized for issuance by the Company from 10,000,000 to
25,000,000. Of the 3,495,114 shares authorized to vote and present
at the Meeting for this matter, 3,327,757 votes were cast in favor,
167,357 votes were cast against and 2,488 abstained. The third
matter was the proposal to approve the amendment of the Company's
1996 Stock Option Plan increasing the number of shares of Common
Stock for which options are authorized to be granted under such
Plan from 300,000 to 900,000 shares. Of the 1,578,278 shares
authorized to vote and present at the Meeting for this matter,
1,399,053 votes were cast in favor, 179,222 votes were cast
against and 8,058 shares abstained.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Certificate of Incorporation of the Company, as amended,
incorporated by reference to Exhibit 3.1 to Registration
Statement No. 83-16453 (the "Registration Statement").
3.2 By-Laws of the Company incorporated by reference to
Exhibit 3.2 of the Registration Statement.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
During the quarter ended September 30, 2000, the registrant
did not file any reports on Form 8-K.
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: October 19, 2000 By:/s/Richard S. Kalin
Richard S. Kalin,
President and (Principal
Executive Officer)
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