UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 2002
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 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, 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 the latest practical date.
4,361,539 shares of common stock, par value $.01 per share as
of July 22, 2002.
MICRONETICS WIRELESS, INC.
INDEX
Page No.
-------
Part I. Financial Information:
Item 1. Financial Statements.
Consolidated Condensed Balance
Sheets - June 30, 2002 and March 3-4
31, 2002
Consolidated Condensed Statements
of Operations - Three Months Ended
June 30, 2002 and June 30, 2001 5
Consolidated Condensed Statement 6-7
of Cash Flows - Three Months Ended
June 30, 2002 and June 30, 2001
Notes to Consolidated Condensed 8
Financial Statements
Item 2. Management's Discussion and Analysis
or Plan of Operation. 9-10
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K. 11
Signature 12
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MICRONETICS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
June 30, March 31,
2002 2002
---------- ----------
CURRENT ASSETS:
Cash $ 2,379,777 $ 2,500,414
Trade accounts receivable
(net of allowance for
doubtful accounts) 1,703,501 1,579,395
Inventories (note 2) 3,174,275 3,078,221
Prepaid expenses 26,287 88,202
Other current assets 122,516 168,371
---------- ----------
TOTAL CURRENT ASSETS 7,406,356 7,414,603
---------- ----------
FIXED ASSETS
Land 162,000 162,000
Building & improvements 975,286 975,286
Furniture, fixtures, and
equipment 3,900,737 3,751,574
Capitalized leases 603,515 603,516
---------- ----------
Gross fixed assets 5,641,538 5,492,376
Accumulated depreciation 3,382,924 3,301,494
---------- ----------
TOTAL (NET) FIXED ASSETS 2,258,614 2,190,882
OTHER ASSETS
Deposits 1,460 1,460
Goodwill 988,182 988,182
---------- ----------
TOTAL OTHER ASSETS 989,642 989,642
---------- ----------
TOTAL ASSETS $10,654,612 $10,595,127
========== ==========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
June 30, March 31,
2002 2002
---------- ----------
CURRENT LIABILITIES:
Short-term loans and capitalized
leases $ 331,043 $ 332,542
Accounts payable 246,328 507,534
Accrued expenses and taxes, other
than income taxes 573,871 477,234
Income taxes payable 24,408 18,974
---------- ----------
TOTAL CURRENT LIABILITIES 1,175,650 1,336,284
---------- ----------
LONG-TERM DEBT:
Notes payable 1,448,603 1,507,291
Capitalized lease obligations 102,564 117,520
---------- ----------
TOTAL LONG-TERM DEBT 1,551,167 1,624,811
---------- ----------
TOTAL LIABILITIES 2,726,817 2,961,095
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock 43,564 43,385
Additional paid - in capital 4,517,583 4,455,497
Retained earnings 3,505,667 3,238,513
Less: Treasury stock at cost,
42,700 shares at June 30, 2002
and 30,400 shares at March 31,
2002 (139,019) (103,363)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 7,927,795 7,634,032
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $10,654,612 $10,595,127
========== ==========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
2002 2001
---------- ----------
Operating revenues $2,341,649 $1,784,025
Cost of operations 1,277,906 1,013,700
--------- ---------
Gross profit 1,063,743 770,325
Selling, general and
administrative expenses 612,450 515,299
Research & development 154,882 94,468
--------- ---------
Operating income 296,411 160,558
Other income (expense):
Rental income 14,000 12,462
Interest income 11,158 8,880
Interest (expense) (30,856) (15,874)
Other income (expense) 6,123 841
--------- ---------
Total other income (expense) 425 6,309
--------- ---------
Income before provision
for income taxes 296,836 166,867
Provision for income taxes 29,684 29,202
--------- ---------
Net income $ 267,152 $ 137,665
========= =========
Net income per share $ 0.06 $ 0.03
========= =========
Diluted weighted average number
of shares outstanding 4,450,282 4,216,739
========= =========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended June 30,
2002 2001
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash flows from operating
activities:
Net income $267,152 $137,665
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 81,430 55,493
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (112,390) (15,188)
(Increase) decrease in security
deposits and other assets - 3,019
(Decrease) increase in accounts
payable, accrued liabilities,
notes payable and other current
liabilities (160,634) (17,922)
------- ------
Net cash provided
by operating activities $ 75,558 $163,067
------- -------
See accompanying notes to consolidated condensed financial statements.
MICRONETICS WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
(UNAUDITED)
Three Months Ended June 30,
2002 2001
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS:
Cash flows from investing
activities:
(Additions) to fixed assets $ (149,162) $ (59,397)
--------- ---------
Net cash provided by (used for)
investing activities $ (149,162) $ (59,397)
--------- ---------
Cash flows from financing
activities:
(Repayments) increase of debt
and capitalized leases (73,642) (25,464)
Proceeds from stock options
exercised 62,265 -
Purchase of treasury stock (35,656) 1,511
--------- ---------
Net cash provided by (used for)
financing activities $ (47,033) $ (23,953)
--------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (120,637) $ 79,717
Cash and cash equivalents, at
beginning of year 2,500,414 1,573,081
--------- ---------
CASH AND CASH EQUIVALENTS, AT
END OF QUARTER $2,379,777 $1,652,798
========= =========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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, 2002 and 2001, the results of
operations for the three month periods ended
June 30, 2002 and 2001 and cash flows for the
three month periods ended June 30, 2002 and
2001.
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, 2002.
The results of operations for the three month
period ended June 30, 2002 are not necessarily
indicative of the results of the full year.
Note 2. Inventories are summarized below:
June 30, 2002 March 31, 2002
------------- --------------
Raw materials and
work-in-process $2,988,679 $2,827,581
Finished goods 392,917 492,961
--------- ---------
3,381,596 3,320,542
Less: allowance for obsolescence (207,321) (242,321)
--------- ---------
Total $3,174,275 $3,078,221
========= =========
Item 2. Management's Discussion and Analysis or Plan of
Operation.
Results of Operations
The Company had revenues of $2,341,649 and $1,784,025 for the
three months ended June 30, 2002 and 2001, respectively, an
increase of $557,624 or 31% in the current period. A large
percentage of this increase was due to the inclusion of sales from
Enon Microwave, Inc. that was acquired by the Company in March
2002. Gross profit as a percent of net sales increased to 45.4% in
the current period from 43.2% during the corresponding period of
the prior fiscal year. This was due primarily to significant
improvement in our Defense Electronics Group. Selling, general and
administrative expenses as a percent of net sales for the current
period decreased to 26.2% from 28.9% during the corresponding
period a year ago. This was due primarily to the impact of
controlled increases against a larger sales base. Research and
development expenses increased to 6.6% of net sales during the
current period as compared to 5.3% of net sales a year ago. The
Company maintained increased new product development activities
during the current period.
The Company had net income of $267,152, or $.06 per share, as
compared to net income of $137,665, or $.03 per share, for the
three month periods ended June 30, 2002 and 2001, respectively. The
weighted average shares outstanding for the three months ended June
30, 2002 and 2001, were 4,450,282 and 4,216,739, respectively.
Financial Condition
The Company's working capital at June 30, 2002 was $6,230,706,
an increase of $152,387 from $6,078,319, the working capital at
March 31, 2002. The Company's current ratio was approximately 6.30
to 1.0 at June 30, 2002; it was approximately 5.55 to 1.0 at March
31, 2002.
Net cash of $75,558 was provided by operating activities
during the three months ended June 30, 2002 as compared to $163,067
that was provided by operating activities during the year earlier
period. This was primarily due to increased inventory and
increased reduction of payables in the current period. Net cash
used by investing activities during the three months ended June 30,
2002 was $149,162 as compared to $59,397 during the year earlier
period. This was due to the purchase of new equipment during the
current period. Net cash used by financing activities during the
three months ended June 30, 2002 was $47,033 as compared to $23,953
during the year earlier period. This was largely due to increased
debt reduction and the purchase of treasury stock in the current
period. As a result of these activities, the Company's cash
position decreased $120,637 during the current three months as
compared to a increase of $79,717 in the year ago 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 lender. This report should be
read in conjunction with the Company's Annual Report on Form 10-KSB
for its fiscal year ended March 31, 2002.
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. 33-16453 (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 June 30, 2002, 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: July 24, 2002 By:/s/Richard S. Kalin
-------------------
Richard S. Kalin,
President (Principal
Executive Officer)