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, 1997
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, 1997.
3,317,208 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, 1997 and March 3-4
31, 1997
Condensed Statements of Operations-
Three Months Ended December 31, 1997
and 1996 5
Condensed Statements of Operations - 6
Nine Months Ended December 31, 1997
and 1996
Condensed Statement of Cash Flows - 7-8
Nine Months Ended December 31, 1997
and 1996
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,
1997 1997
------------------------------
Current assets:
Cash $ 1,110,065 $ 961,314
Receivables (net of
allowance for doubtful
accounts) 796,543 755,716
Inventories (note 2) 1,362,318 1,151,640
Prepaid expenses and other
current assets 41,751 49,568
Deferred tax asset 58,409 118,481
----------- -----------
Total current assets 3,369,086 3,036,719
Fixed assets:
Land 162,000 162,000
Building and improvements 849,899 846,547
Furniture, fixtures and
equipment 1,374,844 1,269,938
Capitalized leases 82,990 33,500
----------- -----------
Gross fixed assets 2,469,733 2,311,985
Accumulated depreciation and
amortization (907,151) (800,030)
----------- -----------
Total (net) fixed assets 1,562,582 1,511,955
Other assets:
Deposits 9,724 1,102
Intangibles (net of amortization) 95,505 98,375
Deferred tax asset 0 0
----------- -----------
Total other assets 105,229 99,477
----------- -----------
Total assets $ 5,036,897 $ 4,648,151
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
--------------------------------------------
December 31, March 31,
1997 1997
------------------------------
Current liabilities:
Short-term loans and capitalized
leases $ 114,034 $ 91,703
Accounts payable 253,397 374,746
Accrued expenses and taxes, other
than income taxes 206,350 155,953
Subordinated debentures 25,000 25,000
Income taxes payable 62,801 31,618
----------- -----------
Total current liabilities 661,582 679,020
Long-term debt:
Capitalized leases 53,325 7,616
Notes payable - bank 885,779 948,022
----------- -----------
Total long-term debt 939,104 955,638
Shareholders' equity:
Common stock 33,172 31,887
Additional paid - in capital 2,496,806 2,393,748
Retained earnings 906,233 587,858
----------- -----------
Total shareholders' equity 3,436,211 3,013,493
----------- -----------
Total liabilities and
shareholders' equity $ 5,036,897 $ 4,648,151
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------
Three Months Ended December 31,
1997 1996
-------------- ----------
Operating revenues $1,243,281 $ 916,207
Cost of operations 681,847 571,487
--------- ---------
Gross profit 561,434 344,720
--------- ---------
Selling, general and
administrative expenses 337,683 217,800
Research and development 83,727 64,903
expense --------- ---------
Operating income 140,024 62,017
Other income (expense):
Rental income 15,062 15,062
Interest income 9,482 10,265
Interest (expense) (21,077) (22,726)
Other income (expense) (2,259) (3,318)
--------- ---------
Total 1,208 (717)
--------- ---------
Income before taxes 141,232 61,300
Provision for income taxes 29,755 11,500
--------- ---------
Net income $ 111,477 $ 49,800
========= =========
Net income per share $ 0.03 $ 0.02
========= =========
Weighted average number
of shares outstanding 3,370,753 3,268,858
========= =========
MICRONETICS
WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
--------------------------------------------
Nine Months Ended December 31,
1997 1996
------------- --------------
Operating revenues $3,455,412 $2,700,256
Cost of operations 2,007,230 1,577,215
--------- ---------
Gross profit 1,448,182 1,123,041
Selling, general and
administrative expenses 875,386 661,421
Research and development expense 196,339 155,009
--------- ---------
Operating income 376,457 306,611
Other income (expense):
Rental income 45,187 45,187
Interest income 27,796 12,642
Interest (expense) (58,729) (69,149)
Other income (expense) 15,770 (7,889)
--------- ---------
Total 30,024 (19,209)
--------- ---------
Income before taxes and
extraordinary item 406,481 287,402
Provision for income taxes 88,105 57,500
--------- ---------
Income before extraordinary
item 318,376 229,902
Extraordinary item --
insurance settlement - 98,566
--------- ---------
Net income $ 318,376 $ 328,468
========= =========
Net income per share
Before extraordinary item $ 0.09 $ 0.07
Extraordinary item - 0.03
--------- ---------
Net income per share $ 0.09 $ 0.10
========= =========
Weighted average number
of shares outstanding 3,370,753 3,268,858
========= =========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------------------------------
Nine Months Ended December 31,
1997 1996
-------------- -------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Operating
Activities:
Net income $ 318,375 $ 328,468
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in deferred tax asset 60,072 81,503
Depreciation and amortization 134,991 98,721
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (243,688) (224,316)
(Increase) decrease in security
deposits and other assets (5,752) 1,306
(Increase) decrease in insurance
receivable - 596,376
(Decrease) increase in accounts
payable accrued liabilities,
notes payable and other current
liabilities (99,505) 27,763
--------- ---------
Net cash provided (utilized)
by operating activities $ 164,493 $ 909,821
========= =========
MICRONETICS WIRELESS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
1997 1996
-------------- --------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (125,882) $ (129,418)
--------- ---------
Net cash provided (used) by
investment activities $ (125,882) $ (129,418)
--------- ---------
Cash Flows from Financing
Activities:
(Reduction) increase of debt
and capitalized leases $ 5,797 $ 26,453
Proceeds from stock options
exercised 104,343 16,000
--------- ---------
Net cash provided (used)
by financing activities $ 110,140 42,453
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 148,751 $ 822,856
Cash and cash equivalents, at
beginning of year 961,314 146,674
---------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $ 1,110,065 $ 969,530
========== =========
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, 1997 and 1996, the results of
operations for the three and nine month periods
ended December 31, 1997 and 1996 and cash flows
for the nine month periods ended December 31,
1997 and 1996.
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, 1997.
The results of operations for the three and nine
month periods ended December 31, 1997 are not
necessarily indicative of the results of the
full year.
Note 2. Inventories are summarized below:
December 31, 1997 March 31, 1997
Raw materials and
work-in-process 1,114,363 974,337
Finished goods 247,955 177,303
---------- ----------
Total 1,362,318 1,151,640
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
The Company had revenues of $1,243,281 and $916,207 for the
three months ended December 31, 1997 and 1996, respectively, an
increase of $327,074 or 35% compared to the prior period. The
Company's net income more than doubled to 111,477, or $.03 per share,
as compared with net income of $49,800, or $.02 per share, for the
three month periods ended December 31, 1997 and 1996, respectively.
The Company had revenues of $3,455,412 and $2,700,256 for the
nine months ended December 31, 1997 and 1996, respectively, an
increase of $755,156 or 28% compared to the prior period. The
Company had net income of $318,376 or $.09 per share, and $328,468,
or $.10 per share, for the nine month periods ended December 31, 1997
and 1996, respectively. For the nine months ended December 31, 1996,
this includes an extraordinary gain of $98,566, or $.03 per share.
Gross profit as a percent of net sales for the three and nine
month periods ended December 31, 1997 was 45.1% and 41.9%,
respectively, as compared to 37.6% and 41.6%, 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, 1997 was 25.3% as compared to 23.8%
in the prior year. For the nine month periods ended December 31,
1997 and 1996, SGA as a percent of net sales was 25.3% as compared to
24.5% for the prior period.
Financial Condition
The Company's working capital at December 31, 1997 was
$2,727,000. It was $2,358,000 at March 31, 1997. The Company's
current ratio was 5.1 to 1 at December 31, 1997 and 4.5 to 1 at March
31, 1997.
Net cash provided by operations in the nine months ended
December 31, 1997 was $164,493 as compared to $909,821 in the prior
year. The increase last year was largely due to the receipt of
payment of the insurance settlement during the period. Net cash
utilized from investment activities was $125,882 during the nine
months ended December 31, 1997 as compared to $129,418 used in the
prior year. This was primarily to purchase new equipment. The net
cash provided by financing activities was $110,140 during the nine
months ended December 31, 1997, as compared to $42,453 during the
prior year. This was as the result of increased exercises of stock
options during the current period.
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 lenders.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) During the quarter ended December 31, 1997, 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 5, 1998 /s/ Richard S. Kalin
Richard S. Kalin,
President
WP51\MICRONET\10Q-JAN.98