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, 2000
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 0-17966
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)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of
1934 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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practical date:
As of January 12, 2001, 4,067,067 shares of the Issuer's
common stock, par value $.01 per share, were outstanding.
Transitional Small Business Disclosure Format (check one);
Yes No X
MICRONETICS WIRELESS, INC.
INDEX
Page No.
Part I. Financial Information.
Item 1. Financial Statements.
Condensed Balance Sheets -
December 31, 2000 and March 3-4
31, 2000
Condensed Statements of Operations-
Nine Months Ended December 31, 2000
and 1999 5
Condensed Statements of Operations - 6
Three Months Ended December 31, 2000
and 1999
Condensed Statement of Cash Flows - 7-8
Nine Months Ended December 31, 2000
and 1999
Notes to Condensed Financial 9
Statements
Item 2. Management's Discussion and Analysis 10-11
of Financial Condition and
Results of Operations.
Part II. Other Information.
Item 6. Exhibits and Reports on Form 8-K. 12
Signature 13
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
December 31, March 31,
2000 2000
Current assets:
Cash $1,605,741 $1,424,988
Receivables (net of
allowance for doubtful
accounts) 1,496,606 1,007,134
Inventories 2,433,164 2,082,964
Prepaid expenses 121,931 52,553
Deferred tax asset 135,388 185,222
Other current assets 70,438 67,911
Total current assets 5,863,268 4,820,772
Fixed assets:
Land 162,000 162,000
Building and improvements 864,554 855,969
Furniture, fixtures and
equipment 2,213,263 2,026,007
Capitalized leases 198,266 143,703
Gross fixed assets 3,438,083 3,187,679
Accumulated depreciation and
amortization 1,757,781 1,591,111
Total (net) fixed assets 1,680,302 1,596,568
Other assets:
Deposits 4,488 4,488
Intangibles (net of amortization) 113,942 122,378
Goodwill 328,945 328,945
Total other assets 447,375 455,811
Total assets $7,990,945 $6,873,151
MICRONETICS WIRELESS, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
December 31, March 31,
2000 2000
Current liabilities:
Short-term loans and capitalized
leases $ 171,207 $ 203,287
Accounts payable 396,890 366,104
Accrued expenses and taxes, other
than income taxes 247,096 166,199
Income taxes payable 53,713 7,389
Total current liabilities 868,906 742,979
Long-term debt:
Notes payable - bank 777,826 703,362
Total long-term debt 777,826 703,362
Shareholders' equity:
Common stock 40,668 39,419
Additional paid - in capital 3,582,088 3,356,870
Retained earnings 2,721,457 2,030,521
Total shareholders' equity 6,344,213 5,426,810
Total liabilities and
shareholders' equity $7,990,945 $6,873,151
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended December 31,
2000 1999
Operating revenues $5,570,439 $4,495,300
Cost of operations 3,200,631 2,804,457
Gross profit 2,369,808 1,690,843
Selling, general and
administrative expenses 1,288,945 1,175,964
Research and development
expense 211,706 99,546
Operating income 869,157 415,333
Other income (expense):
Rental income 53,175 43,300
Interest income 39,910 25,789
Interest (expense) (56,274) (57,089)
Other income (108,385) 17,846
Total (71,574) 29,846
Income before taxes 797,583 445,179
Provision for income taxes 106,648 47,000
Net income $ 690,935 $ 398,179
Net income per share $ 0.17 $ 0.11
Weighted average number
of shares outstanding 4,002,224 3,788,800
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31,
2000 1999
Operating revenues $2,075,585 $1,665,769
Cost of operations 1,098,167 1,097,519
Gross profit 977,418 568,250
Selling, general and
administrative expenses 483,438 395,006
Research and development expense 104,433 62,902
Operating income 389,547 110,342
Other income (expense):
Rental income 13,462 11,200
Interest income 17,451 8,087
Interest (expense) (18,145) (18,578)
Other income (expense) (76,118) 5,615
Total (63,350) 6,324
Income before taxes and
extraordinary item 326,197 116,666
Provision for income taxes 21,793 (27,000)
Net income $ 304,404 $ 143,666
Net income per share $ .08 $ .04
Weighted average number
of shares outstanding 4,002,224 3,788,800
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
2000 1999
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash Flows from Operating
Activities:
Net income $ 690,935 $ 398,179
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in deferred tax asset 49,834 12,000
Depreciation and amortization 179,224 164,868
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (915,694) (571,825)
(Increase) decrease in security
deposits - (3,722)
(Decrease) increase in accounts
payable, accrued liabilities,
notes payable and other current
liabilities 125,927 2,835
Net cash provided
by operating activities $ 130,226 $ 2,335
MICRONETICS WIRELESS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
2000 1999
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (CONTINUED):
Cash Flows from Investment
Activities:
(Additions) to fixed assets $ (250,404) $ (133,784)
Net cash provided (used) by
investment activities (250,404) (133,784)
Cash Flows from Financing
Activities:
(Reduction) of debt
and capitalized leases 74,464 (121,245)
Proceeds from stock options
exercised 226,467 312,772
Purchase of treasury stock - (111,618)
Net cash provided (used)
by financing activities $ 300,931 $ 79,909
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 180,753 (51,540)
Cash and cash equivalents, at
beginning of year 1,424,988 1,164,661
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $1,605,741 $1,113,121
MICRONETICS WIRELESS, INC.
NOTES TO BE CONDENSED FINANCIAL STATEMENTS
Note 1. In the opinion of the Company, the accompanying
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, 2000 and 1999,
the results of operations for the three and nine month
periods ended December 31, 2000 and 1999 and cash
flows for the nine month periods ended December 31,
2000 and 1999.
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, 2000.
The results of operations for the three and nine month
periods ended December 31, 2000 are not necessarily
indicative of the results of the full year.
Note 2. Inventories are summarized below:
December 31, 2000 March 31, 2000
Raw materials and
work-in-process $2,229,572 $1,882,992
Finished goods 203,592 199,972
Total $2,433,164 $2,082,964
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
The Company had revenues of $2,075,585 and $1,665,769 for the
three months ended December 31, 2000 and 1999, respectively,
representing an increase of $409,816 or approximately 24.6%. This
was largely due to increased sales in the Company's Test Solutions
and VCO Products Groups offset by a modest reduction in sales in
the Company's Control Components Group. The Company's net income
increased to $304,404, or $.08 per share, as compared with net
income of $143,666, or $.04 per share, for the three month periods
ended December 31, 2000 and 1999, respectively. This represents an
increase of $160,738 or approximately 111.8% in the current period.
The per share number is based on an increased weighted average
number of shares outstanding of 4,002,224 during the current period
as compared to 3,788,800 in the year ago period.
The Company had revenues of $5,570,439 and $4,495,300 for the
nine months ended December 31, 2000 and 1999, respectively,
representing an increase of $1,075,139 or approximately 23.9%.
This was due to similar reasons as that set forth above for the
current quarter. The Company had net income of $690,935, or $.17
per share, and $398,179 or $.11 per share, for the nine month
periods ended December 31, 2000 and 1999, respectively. This
represents an increase of $292,756 or approximately 73.5% in the
current period.
Gross profit as a percent of net sales for the three and nine
month periods ended December 31, 2000 were 47.1% and 42.5%,
respectively, as compared to 34.1% and 37.6%, respectively, during
the corresponding periods of the prior fiscal year. This was
largely due to product mix. Selling, general and administrative
("SG&A") expenses as a percent of net sales for the three months
ended December 31, 2000 was 23.3% as compared to 23.7% in the prior
year. For the nine month period ended December 31, 2000, SG&A as
a percent of net sales was 23.1% as compared to 26.2% for the prior
period. This was due to spreading out SG&A expenses over a larger
sales base during the current periods. Research and development
("R&D") expense increased to 5.0% of net sales from 3.8% of net
sales for the three months ended December 31, 2000 as compared to
the prior year. For the nine month period ended December 31, 2000,
R&D expenses increased to 3.8% of net sales as compared to 2.2% of
net sales in the corresponding period of the prior year. This was
due to increased activity toward developing new products in the
Company's Testing Solutions and VCO Products Groups.
Financial Condition
The Company's working capital at December 31, 2000 was
$4,994,362. It was $4,077,793 at March 31, 2000. The Company's
current ratio at December 31, 2000 was 6.74 to 1. At March 31,
2000, it was 6.49 to 1.
Net cash provided by operations in the nine months ended
December 31, 2000 was $130,226 as compared to $2,335 in the prior
year. This increase was largely due to increased net income during
the current period. Net cash utilized from investment activities
was $250,404 during the nine months ended December 31, 2000 as
compared to $133,784 used in the prior year. This increase was
primarily due to the purchase of new equipment during both periods.
Net cash provided by financing activities during the nine months
ended December 31, 2000 was $300,931, as compared to $79,909 during
the prior year period. This was largely due to proceeds from the
exercise of stock options and increases in capitalized leases from
the purchase of equipment during the current period, as compared to
proceeds from the exercise of stock options offset partially by
increased repayment of debt and repurchase of treasury stock during
the prior 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.
(a) Exhibits.
3.1 Certificate of Incorporation of the Company, as amended,
incorporated by reference to Exhibit 3.1 to Registration
Statement No. 83-16453 (the "Registration Statement").
3.2 By-Laws of the Company incorporated by reference to
Exhibit 3.2 of the Registration Statement.
(b) Reports on Form 8-K.
During the quarter ended December 31, 2000, 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 25, 2001 By:/s/Richard S. Kalin
Richard S. Kalin,
President
N:\RSKLAW\MICRONET\10Q-DEC.00