<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
Commission file number 0-22122
MICROS-TO-MAINFRAMES, INC.
(Exact name of registrant as specified in its charter)
New York 13-3354896
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
614 Corporate Way, Valley Cottage, NY 10989
(Address of principal executive offices)
(914) 268-5000
(Registrant's telephone number )
Not applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1994 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:
Common Stock, $.001 par value - 4,849,569 shares as of February 11, 2000
<PAGE>
PART I FINANIAL INFORMATION
Micros-to-Mainframes, Inc
Condensed Consolidated Balance Sheets
December 31, March 31,
1999 1999
(Unaudited)
------------------------------
Assets
Current Assets
Cash and cash equivalents $ - $ 678,680
Accounts receivable, net 15,947,955 16,891,070
Inventories 2,131,820 1,428,736
Prepaid expenses and other current assets 1,036,464 736,844
Deferred income taxes 45,000 84,100
---------- ----------
Total current assets 19,161,239 19,819,430
Property, plant and equipment 3,455,965 2,360,427
Less accumulated deprecation and amortization 1,492,968 1,170,173
---------- ----------
1,962,997 1,190,254
Goodwill, net of accumulated amortization 3,507,685 717,781
Investment in Pivot Technologies, Inc. - 1,067,217
Other Assets 318,733 155,078
Total assets ----------- ------------
$ 24,950,654 $ 22,949,760
=========== ============
Liabilities and Shareholders' Equity
Current liabilities
Secured notes payable $ 4,000,000 $ 980,000
Inventory financing agreement 3,063,148 3,811,218
Accounts payable and accrued expenses 2,050,662 4,397,724
----------- -----------
Total current liabilities 9,113,810 9,188,942
Deferred Income taxes 98,400 90,500
----------- -----------
Total Liabilities 9,212,210 9,279,442
Capital lease Obligation, net
of current portion 39,936
Commitments and Contingencies
Shareholders' Equity
Common stock 4,836 4,446
Additional paid-in capital 14,722,918 12,883,170
Retained earnings 970,754 782,702
----------- ------------
Total shareholders' equity 15,698,508 13,670,318
----------- ------------
Total liabilities and shareholders' equity $24,950,654 $ 22,949,760
=========== ============
See accompanying footnotes
<PAGE>
Micros-to-Mainframes, Inc
Condensed Consolidated Statements of Income
Unaudited
Nine Months Ended December 31,
1999 1998
-------------------------------
Revenue
Products sales $ 39,341,806 $ 34,460,739
Services related sales 15,689,954 14,990,932
------------- ------------
55,031,760 49,451,671
------------- ------------
Direct Cost
Products Cost 37,017,021 33,147,328
Cost related to services sales 10,648,605 9,524,404
------------- ------------
47,665,626 42,671,732
------------- ------------
Selling, general and administrative
expenses 6,988,644 6,733,931
Interest expenses 88,272 8,728
------------ ------------
Total cost and expenses 54,742,542 49,414,391
Other Income 23,834 907,189
------------ -------------
Income before income taxes 313,052 944,402
Provision for income taxes 125,000 387,000
------------- --------------
Net income $ 188,052 $ 557,469
============== ==============
Net income per common share:
Basic $ 0.04 $ 0.13
Diluted $ 0.04 $ 0.13
Weighted average number of common and
common equivalent shares used in calculation
for fully diluted per share
Basic 4,829,558 4,415,931
Diluted 4,836,226 4,423,711
See accompanying footnotes
<PAGE>
Micros-to-Mainframes, Inc
Condensed Consolidated Statements of Income
Unaudited
Three Months Ended December 31
1999 1998
-------------------------------
Revenue
Products sales $ 12,773,388 $ 12,369,575
Services related sales 4,870,998 4,943,407
------------- ------------
17,644,386 17,312,982
------------- ------------
Direct Cost
Products Cost 12,038,168 11,631,845
Cost related to services sales 3,201,124 3,616,370
------------- -----------
15,239,292 15,248,215
------------- -----------
Selling, general and administrative
expenses 2,271,381 2,133,838
Interest expenses 38,462 492
----------- -----------
Total cost and expenses 17,549,135 17,382,545
Other Income 6,620 298,891
---------- -----------
Income before income taxes 101,871 229,328
Provision for income taxes 39,000 94,000
----------- ------------
Net income $ 62,871 $ 135,328
============ ============
Net income per common share:
Basic $ 0.01 $ 0.03
Diluted $ 0.01 $ 0.03
Weighted average number of common and
common equivalent shares used in calculation
for fully diluted per share
Basic 4,829,558 4,377,910
Diluted 4,936,226 4,384,555
See accompanying footnotes
<PAGE>
Micros-to-Mainframes, Inc
Condensed Consolidated Statement of Cash Flows
Nine Months Ended December 31
1999 1998
------------------------------
Operating activities
Net income $ 188,052 $ 557,469
Adjustments to reconcile net income
to net cash (used in)operating activities:
Depreciation and amortization 426,518 272,549
Loss from investment in Pivot 1,589
Changes in operating assets and liabilities
net of effects of Pivot Acquistion:
Decrease in accounts receivable 1,060,390 378,180
Increase in inventory (703,084) (140,964)
Decrease in prepaid expenses
and other current assets (420,746) (254,740)
Decrease in deferred income taxes 39,100 317,500
Increase in other assets (158,655) (37,969)
Decrease in accounts payable
and accrued expenses (3,206,206) (917,439)
Decrease in income taxes payable (39,100) (373,284)
Deferred Revenue - (810,000)
----------------------------
Net cash provided by (used in)
operating activities (2,812,142) (1,008,698)
----------------------------
Investing activities
Investment in and advances to Pivot (1,130,508)
Purchase of property and equipment (546,874) (147,870)
Purchase of subsidary,net of cash acquired (371,227) -
-----------------------------
Net cash used in investing activities (918,101) (1,278,378)
-----------------------------
Financing activities
Proceeds from execise of stock options 31,563
Proceeds from secured notes payable 3,020,000
Repurchase of common stock (186,355)
-----------------------------
Net cash (used in)
provided by financing activities 3,051,563 (186,355)
-----------------------------
Increase (decrease) in cash (678,680) (2,473,431)
Cash at the beginning period 678,680 3,991,593
-----------------------------
Cash at the end of period $ - $ 1,518,162
-----------------------------
Supplement disclosures of cash flow information
Cash paid during the quarter for:
Income taxes $ 31,700 $ 723,586
Interest Expenses 83,708 8,728
Supplement schedule of noncash
financing activities:
Acquisition of Pivot Technologies, Inc.
Warrants issued $ 370,771
Common stock issued $1,437,804
See accompanying footnotes
<PAGE>
Micros-to-Mainframes, Inc.
Notes to Condensed Consolidated Financial Statements
1. Summary of Significant Accounting Policies
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements of Micros-to-Mainframes, Inc. and its wholly-owned
subsidiaries Data.Com Results Inc., MTM Advanced Technology, Inc.
and Pivot Technologies, Inc hereafter referred to as the "Company"
have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three and nine months ended December 31, 1999 are
not necessarily indicative of the results that may be expected for
the year ending March 31, 2000. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's Annual Report Form 10-K (Commission
file number 0-22122) for the fiscal year ended March 31, 1999.
INVENTORIES
Inventories, which are comprised principally of computer hardware
and software, are stated at the lower-of-cost or market using the
first-in, first-out (FIFO) method.
RECLASSIFICATION
Certain amounts have been reclassified to conform to the current
year presentation.
2. Acquisition of Pivot Technologies, Inc
On May 18, 1998, the Company acquired 19.9% of Pivot Technologies,
Inc. ("Pivot"), a remote network servicer, and an option (the
"Option") to cause the merger of Pivot into a to-be-created wholly
owned subsidiary of the Company. In consideration for the Option
and the Pivot shares, the Company paid Pivot (exclusive of the
merger consideration payable upon any exercise of the Option)
$475,000 and made further payments, as defined in the Purchase and
Option Agreement, of $346,000 over a five-month period commencing
one month after closing. Pursuant to the Option, the shareholders
of Pivot (exclusive of the Company) would receive 377,130 shares of
the Company's common stock, five-year warrants to acquire 100,000
shares of the Company's common stock at $2.916767 per share, with
one-third such warrants becoming exercisable at the end of each of
the first three years after the exercise of the Option and $337,600
in cash. The Option had an initial term of six months and was
extended for three additional one-month terms for additional cash
consideration of $240,000. Such further payments gave the Company
the right to increase its ownership to 33.4% for no further
consideration. The Company also incurred acquisition costs of
approximately $20,000. On February 22, 1999, the Company increased
its ownership to 33.4%.
The investment in Pivot was accounted for under the equity method
of accounting whereby earnings or losses from the investment are
reflected in the Company's earnings based on the Company's pro rata
ownership interest. The net loss from this investment for the
period from April 1, 1999 to June 1, 1999 aggregated approximately
$1,600.
On June 2, 1999, the Company acquired the remaining 66.6% ownership
of Pivot. In consideration, Pivot shareholders received 377,129
shares of the Company's common stock; five-year warrants to acquire
100,000 shares of the Company's common stock at $2.916767 per
share, exercisable immediately; and $262,603 in cash. The Company
also paid $100,000 to the Pivot shareholders in consideration for
the shareholders' covenant not to compete. Additionally, the
Company entered into employment agreements which require the
payment of approximately $335,000 annually through March 2002. The
approximate value of the consideration for 100% of ownership of
Pivot was approximately $3,356,000 and approximately $75,000 for
other expenses.
As of June 2, 1999, the total assets, liabilities and shareholders'
equity of Pivot were approximately $686,000, $283,000 and $403,000,
respectively. Pivot's activities have been included from the date
of acquisition in the consolidated financial statements.
<PAGE>
3. Shareholders Equity
PREFERRED STOCK:
At the Annual Meeting of Shareholders on August 20, 1996, the
Company amended its Certificate of Incorporation, eliminating the
old Series A preferred stock and authorizing a new class of
2,000,000 shares of "blank check" preferred stock, par value $.001
per share. As of December 31, 1999, there were no preferred
shares issued and outstanding.
EMPLOYEE STOCK OPTION PLAN:
The 1993 Employee Stock Option Plan ("the 1993 Plan") was adopted
by the Company in May 1993 .The 1996 Stock Option Plan ("the 1996
Plan") was approved by the shareholders of the Company on August
20, 1996 and the 1998 Stock Option Plan ("the 1998 Plan") was
approved by the shareholders of the Company on October 16, 1998.
The Plans provide for granting of options, including incentive
stock options, non-qualified stock options and stock appreciation
rights to qualified employees (including officers and directors)
of the Company, independent contractors, consultants and other
individuals, to purchase up to an aggregate of 250,000, 350,000
and 250,000 shares of common stock in the 1993 Plan,1996 Plan and
1998 Plan, respectively. The exercise price of options generally,
may not be less than 100% of the fair market value of the
Company's common stock at the date of grant. Options may not be
exercised more than ten years after the date of grant. Options
granted under the Plans become exercisable in accordance
with different vesting schedules depending on the duration of the
options.
Information regarding the Company's stock option plans is summarized
below:
1993 Plan 1996 Plan
--------------------- ------------------------
Number Option Number Option
of Exercise of Exercise
Options Price Per Options Price Per
Share Share
Outstanding at March 31, 1999 158,334 $1.25-$7.00 199,700 $1.625- 4.43
Options issued during
The First Quarter 2000 9,000 $3.625-4.0625
Options exercised during
The First Quarter 2000 (4,000) $2.875
Options issued during
The Second Quarter 2000 106,500 $2.50- $2.594
The Third Quarter 2000
Options terminated (5,000) $7.00
Options exercised (7,000) 2.25 (1,500) $2.875
------- -------
146,334 $2.25 309,700 $2.25-$4.43
======= =======
<PAGE>
In the third quarter 2000, the Company issued 157,000 stock options from
the 1998 Employee Stock Option Plan to its employees with exercise
prices ranging from $2.685 to $2.95625.
WARRANT:
In connection with the acquisition of Pivot Technologies, Inc, the
Company issued 100,000 Stock Purchase Warrants to Pivot's shareholders
as part of the consideration price of the transaction. Each Warrant
allows the holder to purchase one Micros-to-Mainframes, Inc. common
share at a price of $2.916767, exercisable immediately. As of December
31, 1999, the 100,000 Stock Purchase Warrants were outstanding.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following table sets forth for the periods indicated certain
items in the Company's Consolidated Statements of Income expressed as
a percentage of that period's net sales.
Percentage of Sales
Nine Months ended Three Months ended
December 31, December 31,
1999 1998 1999 1998
Product Sales............... 71.49% 69.69% 72.39% 71.45%
Services related sales ..... 28.51 30.31 27.61 28.55
Net Sales ................... 100.00 100.00 100.00 100.00
Cost of product sales ( as a
% of Product sales)...... 94.09 96.19 94.24 94.04
Cost related to services (as a
% of service related sales) 67.87 63.53 65.72 73.16
Total Direct costs( as a % of
total sales)............. 86.61 86.29 86.37 88.07
Selling, general and
administrative expenses. 12.70 13.62 12.87 12.33
Income before income taxes... 0.57 1.91 0.58 1.32
Net Income................... 0.34 1.13 0.36 0.78
The Company had net sales of approximately $55,032,000 for the Nine
Months Ended December 31, 1999 (the "2000 Period"), as compared to
approximately $49,452,000 for the Nine Months Ended December 31 1998
(the "1999 Period"). The Company had net sales of approximately
$17,644,000 for the Three Months Ended December 31, 1999 (the "2000
Quarter"), as compared to $17,313,000 for the Three Months Ended
December 31, 1998 (the "1999 Quarter"). The increase in sales of
approximately 11% and 2% for the 2000 Period and 2000 Quarter,
respectively, were primarily attributable to an increase in product
sales of $4,881,000 and $404,000 for the 2000 Period and 2000 Quarter,
respectively, and an increase in the service related sales of
approximately $699,000 for the 2000 Period ,offset by a slight decease
of approximately $72,000 in the 2000 Quarter. The revenue related to the
service and consulting business was approximately $15,690,000 for the
2000 Period and approximately $4,871,000 in the 2000 Quarter as compared
to approximately $14,991,000 for the 1999 Period and approximately
$4,943,000 for the 1999 Quarter. These represent an increase in revenue
of approximately 14% and 3% for the products sales and 3% for the
<PAGE>
service related sales for the 2000 Period and a slight decrease of
approximately 1% in the 2000 Quarter, respectively.
As a percentage of net sales, total direct cost of products sold
decreased by approximately 2% for the 2000 Period and by approximately
0.2% decrease in the 2000 Quarter, respectively. As a percentage of net
sales, total direct cost of services sold increased by approximately 2%
and the 2000 and 1999 Period and a 7% decrease in the 2000 Quarter,
respectively.
The Company increased its technical personnel salaries to approximately
$5,659,000 from approximately $4,435,000 or a 28% increased in the 2000
Period as compared to the 1999 Period and an increased to approximately
$1,978,000 from approximately $1,407,000 or a 41% increase in the 2000
Quarter as compared to the 1999 Quarter. Technical service personnel
increased to 136 employees in the 2000 Period from 112 employees in the
comparable period of the prior year, an increase of 21%. This increase
in personnel is due to customer demand for the Company's technical and
consulting services, as indicated by the continued growth of the
Company's Advanced Technology Group. The Company expects to hire
additional professional technicians and engineers to handle the
increased demand pertaining to its system consulting outsourcing
business in the future.
Selling, general and administrative expenses ("SG&A") were
approximately $6,989,000 in the 2000 Period as compared to $6,734,000 in
the 1999 Period and $2,271,000 for the 2000 Quarter compared to
$2,134,000 for the 1999 Quarter. This represented an increase of
approximately 4% for SG&A during the 2000 Period and 6% during 2000
Quarter as compared to the 1999 Period and Quarter. The increase is
primarily attributable to the expenditures of the newly acquired
subsidiary, and the increase in employee payroll, benefits and payroll
taxes.
Interest expense increased to approximately $88,000 and $38,000 in the
2000 period and quarter, respectively, as compare to approximately
$8,700 and $500 in the 1999 period and quarter, respectively. The
increase was due to the Company's need for financing for expansion,
acquisition and additional payroll and expenses.
Other income decreased to approximately $24,000 in the 2000 Period from
approximately $907,000 for the 1999 Period and decreased to
approximately $7,000 in the 2000 Quarter from approximately $298,000 in
the 1999 Quarter. The decrease was due to the Company recognizing in the
1999 Period and 1999 Quarter $810,000 and $270,000, respectively, as a
result of the contractual payment from BTG, Inc. in February 1998 for
services contracted through the third quarter of 1999.
The effective income tax rates for the 2000 Period and 2000 quarter were
approximately 40% and 38% as compared to the 1999 Period and 1999
Quarter of approximately 41%.
As a result of the forgoing, the Company had net income of
approximately $188,000 in the 2000 Period compared to $557,000 in the
1999 Period, and $63,000 for the 2000 Quarter compared to $135,000 for
the 1999-Quarter. This represents a decrease of 66% in the 2000 Period
as compared to the 1999 Period and a 53% decrease for the 2000-Quarter
compared to the 1999 Quarter. The Company believes that its recent
investments in personnel, software and equipment, which has increased
overhead and expenses in the 2000 Period and 2000 Quarter, will have
long term benefits for the shareholders.
<PAGE>
Liquidity and Capital Resources
The Company measures its liquidity in a number of ways, including the
following:
December 31, March 31
1999 1999
(Dollars in thousands,
except current ratio data)
Cash and cash equivalents .............. $ - $ 679
Working capital ........................ $10,047 $10,630
Current ratio .......................... 2.10:1 2.16:1
Working capital line available ......... $ 7,237 $ 9,509
The Company had working capital of approximately $10,047,000 as of
December 31, 1999, a decrease of approximately $583,000 from March 31,
1999.
For the nine months ended December 31, 1999, the Company had net cash
used in operating activities of approximately $2,812,000 derived
primarily from $188,000 of net income, a decrease in accounts receivable
of approximately $1,060,000 offset by decrease in accounts payable of
approximately $3,206,000,offset by an increase in inventory $703,000,
increased in prepaid and other current assets receivable of $421,000.
The Company had cash used in investing activities of approximately
$918,000 from the acquisition of Pivot Technologies, Inc and purchase of
office equipment.
The Company had an increase in its net cash of $3,052,000 from financing
activities, derived from borrowing from its bank of 3,020,000 and
proceeds from options exercised by employees of $32,000.
As a result of the foregoing, the Company had a net decrease in cash of
$679,000.
The Company has entered into two financing agreements for the purchase
of inventory ("floor plan agreements"). These agreements aggregate
approximately $9,300,000 (approximately $6,236,000 and $5,489,000
unused at December 31, 1999 and March 31, 1999, respectively,) and
generally provide for 30-day repayment terms.
The floor-plan agreements generally allow the Company to borrow for a
period of 30 to 60 days interest free. Interest is charged to the
Company only after the due date. In addition, one of these agreements
provides for minimum amounts of tangible net worth and specified
financial ratios.
On January 19, 1999, the Company entered into a new one-year $13,000,000
credit facility with one of its current floor planners. This
$13,000,000 credit facility includes an $8,000,000 floor plan agreement
and a $5,000,000 revolving receivable financing facility. The combined
facility is secured by the Company's assets (other than inventories and
accounts receivable directly financed by other floor planners who have
the lien thereon).
In addition, the Company has a choice of two types of loans: (i) the
prime rate loan, in which interest is calculated at the prime rate
(8.50% at December 31, 1999) on the daily contract balance, and (ii) the
LIBOR loan, in which the unpaid principal amount of LIBOR loans shall
<PAGE>
bear interest prior to maturity at a rate per annum equal to the LIBOR
in effect for each interest period, plus 1.5% per annum (7.3225% at
December 31, 1999).
On December 31, 1999, the Company's total outstanding debt under the
$5,000,000 revolving receivable financing facility was $2,760,000 which
bears interest at the LIBOR plus 1.5% and $1,240,000 which bears
interest at 8.5%. The Company also pays an unused line fee of .125% per
annum on the daily average of the unused amount of the revolving
receivable financing facility.
The Company's current ratio decreased to 2.10:1 at December 31, 1999
from 2.16:1 at March 31, 1999.
The Company believes that expected cash flow from its operations
combined with available financing arrangements will be sufficient to
satisfy its expected cash requirements for the next 12 months. There can
be no assurance, however, that changes in Company's plans or other
events affecting the Company will not result in unexpected expenditures
or cash requirements.
Year 2000 Issue
Many existing computer systems, including certain of the Company's
Internal systems as well as those that the Company sells to customers,
use only the last two digits to identify years in the date field. As a
result, those systems may not accurately distinguish years in the 21st
century from years in the 20th century, or may not function properly
when faced with years later than 1999. This problem is generally
referred to as the "Year 2000 Issue." Computer systems that are able to
deal correctly with dates after 1999 are referred to as "Year-2000-
Compliant."
Year 2000 Readiness Disclosure
The Company has undertaken a complete and thorough review of all of its
operations to determine those aspects which involve or are dependent
upon a computer application. The Company is reviewing the software and
operating systems for each such application to determine if it is Year-
2000-Compliant. Any such system or application which is not Year-2000-
Compliant is being modified or upgraded to assure the Company's
continued ability to operate without interruption. This process has
been completed. The Company is considered Year 2000 compliance from
other companies upon which it may rely for products or services.
The Company expects to implement successfully the systems and
programming changes necessary to address the Year 2000 Issue. The
Company expects to implement these changes using primarily internal
information technology and other personnel. Moreover, the Company does
not expect the costs associated with that implementation to be material
to the Company's financial position or results of operations.
With respect to products sold to customers, the Company does not
warrant any products sold as Year-2000-Compliant. Instead, the Company
refers customers to warrantees provided by the product's manufacturers.
The Company believes the most reasonably likely worst case Year 2000
scenario would include a combination of some or all of the following:
<PAGE>
- - Internal information technology modules or systems may fail to
operate or may give erroneous information. Such failure could result in
shipping delays, inability to generate or delays in generation of
financial reports and statements, inability of the Company to
communicate among its various offices, and computer network downtime
resulting in inefficiencies and higher payroll expenses.
- - Components in HVAC, lighting, telephone, security and similar systems
might fail, causing such systems to fail.
- - Communications with customers and vendors that the Company depends
upon may fail or give erroneous information. These types of problems
could result in such difficulties as the inability to receive or
process customer orders, shipping delays, or sale of products at
erroneous prices. Furthermore, customers may be unable to, or may
suffer delays, in remitting payments to the Company on timely basis. -
The unavailability of products as a result of Year 2000 problems
experienced by one or more key vendors of the Company, or as a result
of changes in inventory levels at aggregators, VARs and similar
providers in response to an anticipated Year 2000 problem and/or the
inability of the Company to develop alternative sources for products.
- - Products sold to some of the Company's customers could fail to
perform some or all of their intended functions. In such a situation,
the Company's maximum obligation would be to repair or replace the
defective products to the extent the Company is required to do so under
manufacturer warranty.
The Company believes its plans for addressing the Year 2000 Issue as
outlined above are adequate to handle the most reasonably likely worst
case scenario. The Company does not believe it will incur a material
financial impact for the risk of failure, or from the costs associated
with assessing the risks of failure, arising from the Year 2000 Issue.
Consequently, the Company does not intend to create a contingency plan
other than as set forth above. In addition, if the Company's assessment
of its vendors, when completed, indicate that certain product shortages
can be anticipated, the Company may adjust its plans accordingly,
although the Company does believe that it has the capacity to maintain
significant levels of inventory.
The statements above describing the Company's plans and objectives for
handling the Year 2000 Issue and the expected impact of the Year 2000
Issue on the Company are forward-looking statements. Those statements
involve risks and uncertainties that could cause actual results to
differ materially from the results discussed above. Factors that might
cause such a difference include, but are not limited to, delays in
executing the plan outlined above and increased or unforeseen costs
associated with the implementation of the plan and any necessary
changes to the Company's systems. Any inability on the part of the
Company to implement necessary changes in a timely fashion could have
an adverse effect on future results of operations. Moreover, even if
the Company successfully implements the changes necessary to address
the Year 2000 Issue, there can be no assurance that the Company will
not be adversely affected by the failure of others to become Year-2000-
Compliant.
Item 6. Exhibits
27.1 Financial Data Schedule
<PAGE>
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.
MICROS-TO-MAINFRAMES, INC.
Date : February 11, 2000 By: /s/ Howard A. Pavony
Howard A. Pavony
Chairman of the Board
of Directors
Date : February 11, 2000 By: /s/ Steven H. Rothman
Steven H. Rothman
Chief Executive Officer and
President and Director
Date : February 11, 2000 By: /s/ Frank T. Wong
Frank T. Wong
Vice President - Finance
(Principal Financial and
Accounting Officer) and
Secretary
<PAGE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 15,948
<ALLOWANCES> 0
<INVENTORY> 2,132
<CURRENT-ASSETS> 19,161
<PP&E> 3,456
<DEPRECIATION> 1,493
<TOTAL-ASSETS> 24,951
<CURRENT-LIABILITIES> 9,252
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 15,699
<TOTAL-LIABILITY-AND-EQUITY> 24,951
<SALES> 55,342
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 47,666
<OTHER-EXPENSES> 6,989
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<INCOME-TAX> 125
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<CHANGES> 0
<NET-INCOME> 188
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
