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 December 31, 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)
(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 December 31, 1995.
2,960,498 shares of common stock, par value $.01 per share.
MICRONETICS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
December 31, 1995 and March 3-4
31, 1995
Condensed Statements of Operations-
Three Months Ended December 31, 1995
and 1994 5
Condensed Statements of Operations - 6
Nine Months Ended December 31, 1995
and 1994
Condensed Statement of Cash Flows - 7-8
Nine Months Ended December 31, 1995
and 1994
Notes to Condensed Financial 9
Statements
Item 2. Management's Discussion and Analysis 10
of Financial Condition and
Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
PART I. FINANCIAL INFORMATION
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
--------------
December 31, March 31,
1995 1995
-----------------------------
Current assets:
Cash $ 144,831 $ 288,015
Receivables
Trade (net of allowance for
doubtful accounts) 702,632 555,246
Inventories (note 2) 878,686 703,241
Insurance receivable 596,376 574,662
Prepaid expenses and other
current assets 22,536 24,126
--------- ---------
Total current assets 2,345,061 2,145,290
Property and equipment, net of
accumulated depreciation and
amortization 410,619 426,417
Other assets 179,672 114,209
Deferred tax asset 92,000 150,000
--------- ---------
Total assets $3,027,352 $2,835,916
========= =========
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
December 31, March 31,
1995 1995
-----------------------------
Current liabilities:
Short term loans and capitalized
leases $ 70,696 $ 74,643
Accounts payable 211,129 288,322
Accrued expenses and taxes, other 149,673 134,570
than income taxes
Subordinated debentures 225,000 -0-
Deferred sales -0- 19,200
Income taxes payable 3,235 3,973
--------- ---------
Total current liabilities 659,733 520,708
Long Term Debt:
Capitalized leases (less current
maturities included above);
long term debt 130,000 180,283
Subordinated debentures -0- 225,000
Shareholder's equity:
Common stock 29,605 28,447
Additional paid - in capital 2,100,242 2,014,784
Retained earnings (deficit) 107,772 (133,306)
---------- ---------
Total shareholders' equity 2,237,619 1,909,925
---------- ---------
Total liabilities and
shareholders' equity $3,027,352 $2,835,916
========== =========
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
3 Months Ended December 31,
1995 1994
-------------- ----------
Operating revenues $ 905,467 $ 502,751
Cost of operations 545,257 381,158
--------- ---------
Gross profit 360,210 121,593
Selling, general and
administrative expenses 237,406 139,768
Research & development 29,809 0
--------- ---------
Operating income 92,995 (18,175)
Other income (expense):
Interest income 1,062 1,500
Interest expense (9,500) (10,326)
Other income (534) 0
--------- ---------
Total (8,972) (8,826)
--------- ---------
Income before provision
for income taxes 84,023 (27,001)
Provision for income taxes 14,000 0
--------- ---------
Net income 70,023 (27,001)
========= =========
Net income (loss) per share $ 0.02 $ (0.01)
========= =========
Weighted average number
of shares outstanding 3,042,690 2,807,044
--------- ---------
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
--------------------------------------------
9 Months Ended December 31,
1995 1994
-------------- ----------
Operating revenues $2,743,717 $1,874,527
Cost of operations 1,625,288 1,372,959
--------- ---------
Gross profit 1,118,434 501,568
Selling, general and
administrative expenses 671,176 420,764
Research & Development 118,942
--------- ---------
Operating income 328,316 80,804
Other income (expense):
Interest income 2,456 4,707
Interest expense (29,846) (28,066)
Other income (1,848) 0
--------- ---------
Total (29,239) (23,359)
--------- ---------
Income before provision
for income taxes 299,077 57,445
Provision for income taxes 58,000 0
--------- ---------
Net income 241,077 57,445
========= =========
Net income per share $0.08 $ 0.02
========= =========
Weighted average number
of shares outstanding 3,210,655 2,807,044
========= =========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
9 Months Ended December 31,
1995 1994
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash flows from operating
Activities:
Net income $ 241,077 57,445
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 85,500 72,815
Changes in assets and liabilities:
(Increase) in accounts receivable,
prepaid expenses and other current
assets (341,240) 130,531
(Increase) decrease in security
deposits and other assets (65,463) (128,806)
Decrease in deferred tax asset 58,000
(Increase) in insurance receivable (21,714) (810,218)
(Decrease) increase in accounts
payable accrued liabilities,
notes payable and other current
liabilities (62,828) (80,390)
Increase in inventory reserve 20,000 750,000
Increase (decrease) in deferred
sales (19,200) 0
----------- --------
Net cash provided (utilized)
by operating activities $ (105,868) $ (8,733)
========= ==========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
9 Months Ended September 30,
1995 1994
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (69,702) $ (58,733)
--------- ---------
Net cash provided (used) by
investment activities (69,702) (58,733)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases (54,230) (53,664)
Proceeds from stock options
exercised 86,616 31,250
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 32,386 261,953
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (143,184) 194,487
Cash and cash equivalents, at
beginning of year 288,015 191,894
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $ 144,831 386,381
========= =========
MICRONETICS, WIRELESS, INC.
NOTES TO BE 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) necessary
to present fairly the financial position as of
December 31, 1995 and 1994, the results of
operations for the three month and nine month
periods ended December 31, 1995 and 1994 and
cash flows for the nine month periods ended
December 31, 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 nine
month periods ended December 31, 1995 are not
necessarily indicative of the results of the
full year.
Note 2. Inventories are summarized below:
December 31, 1995 March 31, 1995
Raw materials and
work-in-process $560,453 $ 596,095
Finished goods 318,233 107,146
Total $878,686 $ 703,241
Note 3. The Company experienced a flood in November 1994. A
portion of the Company's inventory was damaged. The
Company believes it is fully insured for this loss.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company had revenues of $905,467 and $502,751 for the three
months ended December 31, 1995 and 1994, respectively, an increase of
approximately $402,716 or 80% compared to the prior period. The
Company had net income of $70,023 or $.02 per share, as compared with
a net loss of $27,001, or $.01 per share, for the three month periods
ended December 31, 1995 and 1994, respectively. This is a positive
swing of $92,024.
The Company had revenues of $2,743,717 and $1,874,527 for the
nine months ended December 31, 1995 and 1994, respectively, an
increase of $869,190 or 46% from the prior period. The Company had
net income of $241,077 or $.08 per share, and $57,445, or $.02 per
share, for the nine month periods ended December 31, 1995 and 1994,
respectively. This is an increase of $183,632 or 319%.
Gross profit as a percent of net sales for the three and nine
month periods ended December 31, 1995 was 39.8% and 40.8%,
respectively, as compared to 24.2% and 26.8%, respectively, during
the corresponding periods of the prior fiscal year. This is largely
due to a program of seeking larger gross profit margins on commercial
products. Selling, general and administrative expenses ("SGA") as a
percent of net sales for the three months ended December 31, 1995 was
26.2% as compared to 27.8% in the prior year. For the nine month
periods ended December 31, 1995 and 1994, SGA as a percent of net
sales increased to 24.5% from 22.4%. The Company increased its SGA
expenditures by increasing its marketing activities related to the
introduction of its new commercial wireless product line. This was
offset by increased sales in the most recent third quarter.
Financial Condition
The Company's working capital at December 31, 1995 was
$1,685,328. It was $1,624,582 at March 31, 1995. The Company's
current ratio was 3.6 to 1 at December 31, 1995 and 4.1 to 1 at March
31, 1995.
Net cash utilized from operations in the nine months ended
December 31, 1995 was $105,868 as compared to $8,733 in the prior
year. This was largely due to increased working capital requirements
due to increased sales. Net cash utilized from investment activities
was $69,702 during the nine months ended December 31, 1995 as
compared to $58,733 in the prior year. Net cash provided by
financing activities was $32,386 during the nine months ended
December 31, 1995 as compared to $261,953 during the prior year.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended December 31, 1995, 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.
(Registrant)
Dated: February 7, 1996 s\ Richard S. Kalin
Richard S. Kalin,
President
micro\10-q-dec.95