UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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, 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) (Zip Code)
(603)883-2900
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Outstanding at
Class of Common Stock July 24, 1995
$.01 par share 2,844,698
Page 1 of 11. There is no Exhibit Index.
MICRONETICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
June 30, 1995 and March 31, 1995 3-4
Condensed Statements of Operations-
Three Months Ended June 30, 1995 and
June 30, 1994 5
Condensed Statements of Cash Flows -
Three Months Ended June 30, 1995
and June 30, 1994 6-7
Notes to Condensed Financial
Statements 8
Item 2. Management's Discussion and Analysis 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signature 11
PART I. FINANCIAL INFORMATION
MICRONETICS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
--------------
June 30, March 31,
1995 1995
-----------------------------
Current assets:
Cash $ 229,478 $ 288,015
Receivables
Trade (net of allowance for
doubtful accounts) 577,654 555,246
Inventories (note 2) 801,477 703,241
Insurance Receivable 596,376 574,662
Prepaid expenses and other
current assets 13,126 24,126
--------- ---------
Total current assets 2,218,111 2,145,290
Property and equipment, net of
accumulated depreciation and
amortization 423,636 426,417
Other assets 113,287 114,209
Deferred Tax Asset 150,000 150,000
--------- ---------
Total assets $2,905,034 $2,835,916
MICRONETICS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
June 30, March 31,
1995 1995
-----------------------------
Current liabilities:
Short term loans and capitalized
leases $ 70,584 $ 74,643
Accounts payable 277,451 288,322
Accrued expenses and taxes, other
than income taxes 121,421 134,570
Subordinated Debentures 255,000 0
Deferred Sales 40,258 19,200
Income taxes payable 4,642 3,973
--------- ---------
Total current liabilities 739,356 520,708
Long Term Debt:
Capitalized leases (less current
maturities included above);
long term debt and accounts payable
not due for at least one year 166,919 180,283
Subordinated Debentures 0 225,000
Shareholder's equity:
Common stock 28,447 28,447
Additional paid - in capital 2,014,784 2,014,784
Retained earnings (deficit) (44,472) (133,306)
---------- ---------
Total shareholder equity 1,998,759 1,909,925
---------- ---------
Total Liabilities and
Shareholders' Equity $2,905,034 $2,835,916
MICRONETICS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
3 Months Ended
June 30,
1995 1994
-------------- ----------
Operating revenues $ 842,663 $ 670,114
Cost of operations 495,977 486,613
--------- ---------
Gross profit 346,686 183,501
--------- ---------
Selling, general and
administrative expenses 207,021 134,362
Research & Development 40,486
--------- ---------
Operating income 99,179 49,139
Other income (expense):
Interest income 721 893
Interest expense (10,397) (7,417)
Other income (669) 500
--------- ---------
Total (10,345) (6,024)
--------- ---------
Income before provision
for income taxes 88,834 43,115
========= =========
Net income per share
$ 0.03 0.02
========= =========
Weighted average number
of shares outstanding 3,052,831 $2,803,168
MICRONETICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
3 Months Ended
June 30,
1995 1994
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from operating
Activies:
Net income $ 88,834 43,115
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 27,600 25,305
Changes in assets and liabilities:
(increase) in accounts receivable,
prepaid expenses and other current
assets (109,644) 96,058
(Increase) Decrease in security
deposits and other assets (922) (10,403)
(Increase) in insurance receivable (21,715) 0
(Decrease) increase in accounts
payable accrued liabilities
notes payable and other current
liabilities 20,611 (4,930)
(Increase) in deferred sales (21,058) 0
--------- ----------
Net cash provided (utilized)
by operating activities $ (16,294) $ 149,145
========= ==========
MICRONETICS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
3 Months Ended
June 30,
1995 1994
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (24,819) $ (22,138)
--------- ---------
Net cash provided (used) by
investment activities (24,819) (22,138)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases (17,424) (19,678)
Proceeds from stock options
exercised 0 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 (17,424) 277,189
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (58,537) 404,196
Cash and cash equivalents, at
beginning of year 288,015 191,894
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $ 229,478 596,090
MICRONETICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. In the opinion of the Company, the accompany-
ing unaudited consolidated condensed financial
statements contain all adjustments (consisting
of only normal recurring adjustments) which in
the opinion of management are necessary in order
to present fairly the financial position as of
June 30, 1995 and 1994, the results of
operations for the three month periods ended
June 30, 1995 and 1994 and cash flows for the
three month periods ended June 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 month
period ended June 30, 1995 are not necessarily
indicative of the results of the full year.
Note 2. Inventories are summarized below:
June 30, 1995 March 31, 1995
Raw materials and
work-in-process $608,272 $596,095
Finished goods 193,205 107,146
Total $801,477 $703,241
Item 2. Management's Discussion and Analysis
Results of Operations
The Company had revenues of $842,663 and $670,114 for the three
months ended June 30, 1995 and 1994, respectively, an increase of
$172,549 or approximately 26% in the current period. Gross profit as
a percent of net sales increased to 41.1% during the current period
as compared to 27.4% during the corresponding period of the prior
fiscal year. This was largely a reflection of increased sales of
commercial products for wireless communications systems. Selling,
general and administrative expenses as a percent of net sales for the
current period was 24.6% as compared to 20.1% for the corresponding
year earlier period. Research and development expenses were broken
out in the current period and they amounted to 4.8% of sales.
The Company had net income of $88,834, or $.03 per share, as
compared to net income of $43,112, or $.02 per share, for the three
month periods ended June 30, 1995 and 1994, respectively. This is an
increase of $45,719 or 106% in the current period. The weighted
average shares outstanding for the three months ended June 30 1995
were 3,052,831 as compared to 2,803,168 in the year earlier period.
Financial Condition
The Company's working capital at June 30, 1995 was $1,478,755,
a decrease of $145,827 from $1,624,582, the working capital at March
31, 1995. The Company's current ratio was approximately 3 to 1 at
June 30, 1995; it was approximately 4.1 to 1 at March 31, 1995.
During the current quarter, $225,000 of convertible debentures (which
are likely to be converted if the Company's Common Stock stays at its
current level) were reclassified as short-term debt from long-term
debt.
Net cash of $16,294 was utilized by operating activities during
the three months ended June 30, 1995 as compared to $149,145 of cash
provided during the year earlier period. This was primarily due to
an increase in accounts receivable during the quarter, as compared to
a $96,058 decrease in such receivables during the year earlier
period. Net cash utilized by investing activities during the three
months ended June 30, 1995 was $24,819 as compared to net cash
utilized by investing activities of $22,138 during the year earlier
period. This use of cash was primarily due to the Company's purchase
of equipment during both periods. Net cash utilized by financing
activities during the three months ended June 30, 1995 was $17,424,
as compared to $277,189 of cash provided during the year earlier
period. This was primarily due to the completion of a private
placement during the period ended June 30, 1994. As a result of
these activities, the Company's cash position decreased by $58,537
during the current three months as compared to an increase of
$404,196 in the year ago period.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended June 30, 1995, the registrant did
not file any reports on Form 8-K.
SIGNATURE
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICRONETICS, INC.
(Registrant)
Dated: August 1, 1995 By: s/Richard S. Kalin
Richard S. Kalin,
President (Principal Executive
and Financial Officer)
micro\10-Q-JUN.95