FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 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 December 31, 1996.
3,141,438 shares of common stock, par value $.01 per share.
MICRONETICS WIRELESS, INC.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets -
December 31, 1996 and March 3-4
31, 1996
Condensed Statements of Operations-
Three Months Ended December 31, 1996
and 1995 5
Condensed Statements of Operations - 6
Nine Months Ended December 31, 1996
and 1995
Condensed Statement of Cash Flows - 7-8
Nine Months Ended December 31, 1996
and 1995
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,
1996 1996
-----------------------------
Current assets:
Cash $ 969,530 $ 146,674
Receivables (net of
allowance for doubtful
accounts) 707,278 688,828
Inventories (note 2) 1,023,759 834,209
Insurance receivable 0 596,376
Prepaid expenses and other
current assets 40,109 23,793
Deferred tax asset 25,000 25,000
--------- ---------
Total current assets 2,765,676 2,314,880
Fixed assets:
Land 162,000 162,000
Building and improvements 846,547 840,247
Furniture, fixtures and
equipment 1,095,742 988,624
Capitalized leases 118,535 102,535
--------- ---------
Gross fixed assets 2,222,824 2,093,406
Accumulated depreciation and (762,535) (674,128)
amortization --------- ---------
Total (net) fixed assets 1,460,289 1,419,278
Other assets:
Deposits 3,780 5,086
Intangibles (net of amortization) 99,762 109,814
Deferred tax asset 69,888 151,391
-------- --------
Total other assets 173,430 266,291
-------- --------
Total assets $4,399,395 $4,000,449
========= =========
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
December 31, March 31,
1996 1996
-----------------------------
Current liabilities:
Short-term loans and capitalized
leases $ 83,936 $ 90,982
Accounts payable 261,217 218,046
Accrued expenses and taxes, other
than income taxes 129,979 148,455
Subordinated debentures 25,000 25,000
Income taxes payable 7,144 3,815
--------- ---------
Total current liabilities 507,276 486,298
Long-term debt:
Capitalized leases 22,315 7,978
Notes payable - bank 966,251 947,089
--------- ---------
Total long-term debt 988,566 955,067
Shareholders' equity:
Common stock 31,414 31,166
Additional paid - in capital 2,351,282 2,335,530
Retained earnings 519,857 192,388
---------- ---------
Total shareholders' equity 2,903,553 2,559,084
---------- ---------
Total liabilities and
shareholders' equity $4,399,395 $4,000,449
========== =========
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------
Three Months Ended December 31,
1996 1995
-------------- ----------
Operating revenues $ 916,207 $ 905,467
Cost of operations 571,487 545,257
--------- ---------
Gross profit 344,720 360,210
--------- ---------
Selling, general and
administrative expenses 217,800 237,406
Research and development 64,903 29,809
expense --------- ---------
Operating income 62,017 92,995
Other income (expense):
Rental income 15,062 0
Interest income 10,265 1,062
Interest (expense) (22,726) (9,500)
Other income (expense) (3,318) (534)
--------- ---------
Total (717) (8,972)
--------- ---------
Income before taxes 61,300 84,023
Provision for income taxes 11,500 14,000
--------- ---------
Net income $ 49,800 $ 70,023
========= =========
Net income per share $ 0.02 $ 0.02
========= =========
Weighted average number
of shares outstanding 3,268,858 3,042,690
========= =========
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------
Nine Months Ended December 31,
1996 1995
-------------- ----------
Operating revenues $2,700,256 $2,743,717
Cost of operations 1,577,215 1,625,283
--------- ---------
Gross profit 1,123,041 1,118,434
Selling, general and
administrative expenses 661,421 671,176
Research and development expense 155,009 118,942
--------- ---------
Operating income 306,611 328,316
Other income (expense):
Rental income 45,187 0
Interest income 12,642 2,456
Interest (expense) (69,149) (29,846)
Other income (expense) (7,889) (1,849)
--------- ---------
Total (19,209) (29,239)
--------- ---------
Income before taxes and
extraordinary item 287,402 299,077
Provision for income taxes 57,500 58,000
--------- ---------
Income before extraordinary
item 229,902 241,077
Extraordinary item --
insurance settlement 98,566 -
--------- ---------
Net income $ 328,468 $ 241,077
========= =========
Net income per share
Before extraordinary item $ 0.07 $ 0.08
Extraordinary item 0.03 -
--------- ---------
Net income per share $ 0.10 $ 0.08
========= =========
Weighted average number
of shares outstanding 3,268,858 3,120,655
========= =========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
Nine Months Ended December 31,
1996 1995
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Operating
Activities:
Net income $ 328,468 $ 241,077
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in deferred tax asset 81,503 58,000
Depreciation and amortization 98,721 85,500
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (224,316) (341,240)
(Increase) decrease in security
deposits and other assets 1,306 (65,463)
(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 27,763 (62,828)
Increase (decrease) in deferred
sales 0 (19,200)
--------- ----------
Net cash provided (utilized)
by operating activities $ 909,821 $ (105,868)
========= ==========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
1996 1995
-------------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (129,418) $ (69,702)
--------- ---------
Net cash provided (used) by
investment activities (129,418) (69,702)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases 26,453 (54,230)
Proceeds from stock options
exercised 16,000 86,616
Proceeds from issuance of common
stock 0 0
Proceeds from issuance of
subordinated convertible
debentures 0 0
--------- ---------
Net cash provided (used)
by financing activities 42,453 32,386
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 822,856 (143,184)
Cash and cash equivalents, at
beginning of year 146,674 288,015
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $ 969,530 $ 144,831
========= =========
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, 1996 and 1995, the results of
operations for the three and nine month periods
ended December 31, 1996 and 1995 and cash flows
for the nine month periods ended December 31,
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 nine
month periods ended December 31, 1996 are not
necessarily indicative of the results of the
full year.
Note 2. Inventories are summarized below:
December 31, 1996 March 31, 1996
Raw materials and
work-in-process $ 783,595 $ 649,657
Finished goods 240,164 184,552
Total $1,023,759 $ 834,209
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company had revenues of $916,207 and $905,467 for the three
months ended December 31, 1996 and 1995, respectively, an increase of
approximately $10,740 or 1.2% compared to the prior period. The
Company had net income of $49,800, or $.02 per share, as compared
with net income of $70,023, or $.02 per share, for the three month
periods ended December 31, 1996 and 1995, respectively.
The Company had revenues of $2,700,256 and $2,743,717 for the
nine months ended December 31, 1996 and 1995, respectively, a
decrease of $43,461 or 1.6% compared to the prior period. The
Company had net income of $328,468, or $.10 per share, and $241,077,
or $.08 per share, for the nine month periods ended December 31, 1996
and 1995, respectively. This includes an extraordinary gain of
$98,566, or $.03 per share, in the current period.
Gross profit as a percent of net sales for the three and nine
month periods ended December 31, 1996 was 37.6% and 41.6%,
respectively, as compared to 39.8% and 40.8%, respectively, during
the corresponding periods of the prior fiscal year. Selling, general
and administrative expenses ("SGA") as a percent of net sales for the
three months ended December 31, 1996 was 23.8% as compared to 26.2%
in the prior year. For the nine month periods ended December 31,
1996 and 1995, SGA as a percent of net sales remained at 24.5% for
each year.
Financial Condition
The Company's working capital at December 31, 1996 was
$2,258,400. It was $1,828,582 at March 31, 1996. The Company's
current ratio was 5.5 to 1 at December 31, 1996 and 4.76 to 1 at
March 31, 1996.
Net cash provided by operations in the nine months ended
December 31, 1996 was $909,821 as compared to net cash utilized from
operations of $105,868 in the prior year. This was largely due to
the receipt of payment of the insurance settlement and net income
from the period. Net cash utilized from investment activities was
$129,418 during the nine months ended December 31, 1996 as compared
to $69,702 used in the prior year. The net cash provided by
financing activities was $42,453 during the nine months ended
December 31, 1996 as compared to $32,386 during the prior year.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended December 31, 1996, 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: January 31, 1997 s\ Richard S. Kalin
Richard S. Kalin,
President
micronet\10q-dec.96