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 December 31, 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 .
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Commission file number 0-17966
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MICRONETICS, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 22-2063614
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
26 Hampshire Drive, Hudson NH 03051
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(Address of principal executive offices)
(Zip Code)
(603) 883-2900
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(Issuer's telephone number, including area code)
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(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:
4,402,014 shares of common stock, par value $.01 per share, as
of January 23, 2003.
MICRONETICS, INC.
INDEX
Page No.
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Part I. Financial Information:
Item 1. Financial Statements.
Consolidated Condensed Balance
Sheets - December 31, 2002 and March
31, 2002 3
Consolidated Condensed Statements
of Operations - Nine Months Ended
December 31, 2002 and 2001 5
Consolidated Condensed Statements
of Operations - Three Months Ended
December 31, 2002 and 2001 6
Consolidated Condensed Statement
of Cash Flows - Nine Months Ended
December 31, 2002 and 2001 7
Notes to Consolidated Condensed
Financial Statements 9
Item 2. Management's Discussion and Analysis
or Plan of Operation. 14-17
Item 3. Controls and Procedures 17
Item 4. Submission of Matters to a Vote of 17-18
Security Holders
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K. 19
Signature 20
Certifications 21-24
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
Assets
December 31, March 31,
2002 2002
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 3,174,527 $ 2,500,414
Accounts receivable
(net of allowance for
doubtful accounts) 1,697,181 1,579,395
Inventories 2,992,492 3,078,221
Prepaid expenses 133,571 88,202
Other current assets 116,318 164,460
---------- ----------
TOTAL CURRENT ASSETS 8,114,089 7,410,692
---------- ----------
PROPERTY AND EQUIPMENT
Land 162,000 162,000
Building & improvements 975,286 975,286
Furniture, fixtures, and
equipment 4,065,022 3,751,574
Capitalized leases 603,516 603,516
----------- ----------
5,805,824 5,492,376
Less: Accumulated depreciation 3,491,914 3,301,494
----------- ----------
TOTAL PROPERTY AND EQUIPMENT 2,313,910 2,190,882
OTHER ASSETS
Security deposits 5,484 1,460
Goodwill 1,117,197 1,117,197
----------- ----------
TOTAL OTHER ASSETS 1,122,681 1,118,657
---------- ----------
TOTAL ASSETS $11,550,680 $10,720,232
========== ==========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
Liabilities and Shareholders' Equity
December 31, March 31,
2002 2002
------------- -----------
CURRENT LIABILITIES:
Short-term loans and capitalized
leases $ 296,729 $ 332,542
Accounts payable 332,374 507,534
Accrued expenses and taxes, other
than income taxes 611,755 477,234
Income taxes payable 181,770 25,442
---------- ----------
TOTAL CURRENT LIABILITIES 1,422,628 1,342,752
---------- ----------
NONCURRENT LIABILITIES:
Notes payable 1,222,985 1,507,291
Capitalized lease obligations 72,070 117,520
---------- ----------
TOTAL NONCURRENT LIABILITIES 1,295,055 1,624,811
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TOTAL LIABILITIES 2,717,683 2,967,563
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock 44,020 43,385
Additional paid - in capital 4,667,808 4,455,497
Retained earnings 4,322,958 3,357,150
Less: Treasury stock at cost,
68,500 shares at December 31,
2002 and 30,400 shares at
March 31, 2002 (201,789) (103,363)
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TOTAL SHAREHOLDERS' EQUITY 8,832,997 7,752,669
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $11,550,680 $10,720,232
========== ==========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended December 31,
2002 2001
-------------- -------------
Net sales $7,879,925 $5,655,711
Cost of sales 4,318,628 3,155,186
--------- ---------
Gross profit 3,561,297 2,500,525
Selling, general and
administrative expenses 1,902,127 1,443,458
Research & development expenses 498,827 295,951
--------- ---------
Income from operations 1,160,343 761,116
Other income (expense):
Interest income 55,201 24,999
Interest expense (85,393) (49,027)
Other income (expense) 16,206 3,582
--------- ---------
Total other income (expense) (13,986) (20,446)
--------- ---------
Income before provision
for income taxes 1,146,357 740,670
Provision for income taxes 180,549 128,962
--------- ---------
Net income $ 965,808 $ 611,708
--------- ---------
Net income per share $ .22 $ .14
--------- ---------
Diluted weighted average number
of shares outstanding 4,453,587 4,222,909
========= =========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended December 31,
2002 2001
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Net sales $2,884,014 $1,954,112
Cost of sales 1,560,085 1,047,845
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Gross profit 1,323,929 906,267
Selling, general and
administrative expenses 701,495 479,569
Research & development expenses 159,655 98,673
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Income from operations 462,776 328,025
Other income (expense):
Interest income 29,185 6,665
Interest expense (27,157) (16,322)
Other income (expense) 3,928 15,082
--------- ---------
Total other income (expense) 5,956 5,425
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Income before provision
for income taxes 468,732 333,450
Provision for income taxes 93,747 52,518
--------- ---------
Net income $ 374,985 $ 280,932
========= =========
Net income per share $ .08 $ .07
========= =========
Diluted weighted average number
of shares outstanding 4,476,385 4,235,438
========= =========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31,
2002 2001
------------- ------------
Cash flows from operating
activities:
Net income $ 965,808 $ 611,708
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 190,420 148,443
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable, inventories, prepaid
expenses and other current assets (29,284) 98,258
(Increase) decrease in security
deposits and other assets (4,024) (30,411)
(Decrease) increase in accounts
payable, accrued liabilities,
notes payable and other current
liabilities 79,875 (160,283)
--------- --------
Net cash provided
by operating activities $1,202,797 $ 667,715
--------- --------
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
(UNAUDITED)
Nine Months Ended December 31,
2002 2001
---------- --------------
Cash flows from investing
activities:
Purchase of property and
equipment $ (313,448) $ (124,093)
--------- ---------
Net cash (used for)
investing activities $ (313,448) $ (124,093)
--------- ---------
Cash flows from financing
activities:
Repayments of debt and
capitalized leases (329,756) (19,690)
Proceeds from stock options
exercised 212,946 147,993
Purchase of treasury stock (98,426) (103,263)
--------- ---------
Net cash provided by (used for)
financing activities $ (215,236) $ 25,040
NET INCREASE IN CASH AND CASH
EQUIVALENTS $ 674,113 $ 568,662
Cash and cash equivalents,
beginning of year 2,500,414 1,573,081
--------- ----------
CASH AND CASH EQUIVALENTS,
END OF QUARTER $3,174,527 $2,141,743
========= =========
See accompanying notes to consolidated condensed financial statements.
MICRONETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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) which in the
opinion of management are necessary in order to present fairly the
financial position as of December 31, 2002 and March 31, 2002, the
results of operations for the three and nine month periods ended
December 31, 2002 and 2001 and cash flows for the nine month
periods ended December 31, 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/A for
its fiscal year ended March 31, 2002.
The results of operations for the three and month periods ended
December 31, 2002 are not necessarily indicative of the results of
the full year.
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business:
Micronetics, Inc., formerly Micronetics Wireless, Inc., changed its
name during the current fiscal year. The Company, which includes
its wholly-owned subsidiaries, Microwave & Video Systems, Inc. and
Enon Microwave, Inc., is engaged in the design, development,
manufacture and marketing of a broad range of high performance
wireless components and test equipment used in digital cellular,
microwave, satellite, radar and communication systems around the
world. Approximately 25% of the Company's sales derive from
foreign markets.
(b) Principles of Consolidation:
The consolidated financial statements include the accounts of the
Company including its two wholly-owned subsidiaries, Microwave &
Video Systems, Inc. and Enon Microwave, Inc. All significant
intercompany transactions are eliminated.
(c) Inventory Valuation:
Inventory is valued at the lower of cost (first-in, first-out
method) or market.
MICRONETICS, INC. AND SUBSIDIARIES
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) Depreciation and Amortization:
Fixed assets are reflected at cost.
Depreciation of fixed assets are computed by both straight-line and
accelerated methods at rates adequate to allocate the cost of
applicable assets over their expected useful lives.
(e) Goodwill and Business Combinations:
Until March 31, 2002, the excess of the cost of investment in
subsidiaries over the carrying value of assets acquired is shown as
goodwill, which was amortized on a straight-line basis over a
maximum of 40 years. Effective April 1, 2002, the Company has
adopted the provisions of SFAS 142.
In July 2001, the FASB issued Statement No. 141, Business
Combinations, and Statement No. 142, Goodwill and Other Intangible
Assets. Statement No. 141 requires that the purchase method of
accounting be used for all business combinations initiated after
June 30, 2001 as well as all purchase method business combinations
completed after June 30, 2001. Statement No. 141 also specifies
criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from
goodwill. Statement No. 142 requires that goodwill and intangible
assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment at least annually in accordance
with the provisions of Statement No. 142. Statement No. 142 also
requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives, and
reviewed for impairment in accordance with SFAS No. 121.
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to Be Disposed Of. The Company adopted the provisions
of Statement No. 141 as of July 1, 2001. The adoption of Statement
No. 141 did not have a material impact on the Company's financial
position or results of operations. The Company adopted the
provisions of Statement No. 142 effective April 1, 2002.
In connection with the adoption of SFAS 142, Micronetics was
required to assess goodwill for impairment within six months of
adoption and is required to conduct an annual impairment test
thereafter. An annual impairment test will be performed in the
fourth quarter of each fiscal year and any future impairment of
goodwill will be charged to operations.
MICRONETICS, INC. AND SUBSIDIARIES
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) Income taxes:
The financial statements (including the provision for income taxes)
are prepared on an accrual basis. Temporary differences occur when
income and expenses are recognized in different periods for
financial reporting purposes and for purposes for computing income
taxes currently payable. Deferred taxes are provided as a result
of such temporary differences.
(g) Research and Development Costs:
Research and development costs are charged to expense in the year
incurred. The amounts expended for the three months ended December
31, 2002 and 2001 were approximately $159,655 and $98,673,
respectively. The amounts expended for the nine months ended
December 31, 2002 and 2001 were approximately $498,827 and
$295,951, respectively.
(h) Net Income Per Share:
Primary and fully diluted net income per share is calculated based
on the net income for each period divided by the weighted average
number of common shares and common equivalent shares outstanding
during each period. Common stock equivalents represent the
dilutive effect of the assumed exercise of certain outstanding
stock options.
(i) Statement of Cash Flows:
For purposes of the statement of cash flows, the Company considers
all highly liquid investments purchased with an original maturity
of three months or less to be cash equivalents.
(j) Use of Estimates:
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reporting period. Actual results could
differ from those estimates.
(k) Vulnerability Due to Certain Concentrations:
All of the Company's assets and operations are located in three
facilities.
MICRONETICS, INC. AND SUBSIDIARIES
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l) Revenue Recognition:
The Company generates its revenues from the sale of products,
technology development, and licensing. The Company sells its
products through a direct sales force and sales representatives.
The Company's products are generally hardware and occasionally
bundled hardware and software that is delivered together to
original equipment manufacturers (OEMs) of a variety of
telecommunications and networking products that are considered end
users.
Revenues from products are recognized in accordance with Staff
Accounting Bulletin No, 101, "Revenue Recognition in Financial
Statements' ("SAB 101") when the following criteria are met:
persuasive evidence of an arrangement exists, delivery of product
has occurred, the price to the buyer is fixed or determinable, and
collectibility is probable. The Company has no obligation to
customers after the date on which products are delivered other than
pursuant to warranty obligations.
Revenues from technology development contracts are recognized upon
completion of milestones as set forth in a specific contract.
At this time, Micronetics does not offer a right to return any
Micronetics product (other than for warranty obligations), has no
post-shipment obligations, has no policy of awarding credits or
discounts and currently offers no price protection or similar
privileges. Unless purchasers acquire an extended warranty, which
is a program we have not yet sold, Micronetics offers a one year
warranty policy and establishes a warranty reserve. Micronetics
also charges to expense when incurred any warranty costs not
covered by the reserve. In order to return a product, Micronetics
must issue a Return Material Authorization. This policy is the
same for each of Micronetics' three segments (Defense Electronics
Group, Test Solutions Group and VCO Products Group).
(m) Reclassifications:
Certain reclassifications have been made to the 2001 comparative
financial statements to conform to the 2002 presentation.
MICRONETICS, INC. AND SUBSIDIARIES
Note 3. Inventories are summarized below:
December 31, 2002 March 31, 2002
---------------- --------------
Raw materials and
work-in-process $2,759,277 $2,714,953
Finished goods 403,344 492,961
--------- ---------
3,162,621 3,207,914
Less: allowance for obsolescence (170,129) (129,693)
---------- ----------
Total $2,992,492 $3,078,221
========= =========
Note 4. Subsequent Event.
On January 20, 2003, the Company acquired substantially all of
the assets and assumed certain defined liabilities of Microwave
Concepts, Inc., a New Jersey corporation, based in Fairfield, NJ
("Micro-Con"). Micro-Con manufactures integrated microwave
assemblies, which include up and down converters, phase shifters,
filters, attenuators and amplifiers. Prior to January 20, 2003,
the Company was a customer of Micro-Con.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
Results of Operations
Operating revenues for Q3 FY03 were $2,884,014 as compared to
operating revenues of $1,954,112 for Q3 FY02, an increase of
$929,902 or 47.6%. Decreases of $147,367 in our Test Solutions
Group were largely offset by increased revenues of $1,066,595 in
our Defense Electronics Group. A large percentage of the increase
in revenues of the Defense Electronics Group was due to the
inclusion of revenues from our recent acquisition of Enon
Microwave, Inc. ("Enon"). Total revenues for Q3 FY03 without
inclusion of revenues from Enon would have been $283,824 or 15%
higher than the same quarter last year. Revenues for the Test
Solutions Group declined primarily due to soft sales in the
telecommunications industry.
Gross profit margin company wide remained at 46% for Q3 FY02.
Gross profit margin in the Defense Electronics Group during the
quarter increased to 47% from 38% last year. Gross profit margin
in the Test Solutions Group decreased to 43% from 59% last year due
to soft sales in the telecommunications industry and product mix.
Gross profit margin in the VCO Products Group decreased to 43% from
48% last year due to establishing inventory reserves due to
obsolescence.
Research and development ("R&D") expenses increased to 5.5% of
revenues in Q3 FY03 compared to 5.0% of revenues in the same
quarter last year. This was due largely to new product development
activities in our Defense Electronics Group. R&D expenses in the
Defense Electronics Group were up $82,487 during the quarter
compared to $21,550 for the same quarter last year due to addition
of Enon and other new product development activities. R&D expenses
in the Test Solutions Group decreased $14,445 or 28% compared to
$51,881 for the same period last year. R&D expenses in the VCO
Products Group were down $7,060 or 28% compared to $25,242 for the
same period last year due to reduced development activities.
Selling, general and administrative ("SG&A") expenses as a percent
of revenues 24.3% of revenues for the current period as compared to
24.5% of revenues in the corresponding period last year. These
expenses grew 48% compared to the same period last year. The
majority of this growth came from the addition of Enon to our
Defense Electronics Group. Expenses in the Defense Electronics
Group for Q3 FY03 were up $249,606 or 103% during Q3 FY03 compared
to the same quarter last year. SG&A expenses in the Test Solutions
Group decreased $20,497 or 12% compared to the same period last
year due to reductions as a result of lower sales. SG&A expenses
in the VCO Products Group increased $3,828 or 5% compared to the
same period last year due to additional marketing expenses during
the quarter.
Net income for Q3 FY03 was $374,985, or $.08 per share, compared to
$280,932, or $.07 per share during Q3 FY02. Most of this increase
was due to income growth in the Defense Electronics Group offset by
lower operating income from the two other Groups.
Operating revenues for the nine months ended December 31, 2002 were
$7,879,925 as compared to operating revenues of $5,655,711 for the
comparable period last year, an increase of $2,224,214 or 39%.
Decreases of $421,861 in our Test Solutions Group and $103,725 in
our VCO Products Group were largely offset by increased revenues of
$2,749,802 in our Defense Electronics Group. A large percentage of
the increase in revenues of the Defense Electronics Group was due
to the inclusion of revenues from our recent acquisition of Enon
Microwave. Total revenues for current nine month period without
inclusion of revenues from Enon would have been $367,673 or 6.5%
higher than the same period last year. Revenues for the Test
Solutions and VCO Products Groups declined primarily due to soft
sales in the telecommunications industry.
Gross profit margin for the nine months ended December 31, 2002
increased to 45.2% versus 44.2% for the same period last year.
Gross profit margin in the Defense Electronics Group increased to
46% from 39% in the same period last year. Gross profit margin in
the Test Solutions Group decreased to 44% from 52% from the same
period last year due to soft sales in the telecommunications
industry and product mix. Gross profit margin in the VCO Products
Group decreased slightly to 45% from 46% the same period last year
due to establishing inventory reserves.
R&D expenses increased to 6.3% of revenues in the nine months ended
December 31, 2002, as compared to 5.2% of revenues in the same
period last year. R&D expenses in the Defense Electronics Group
were up $268,630 compared to $50,421 for the same period last year
due largely from the addition of Enon and other new product
development activities. R&D expenses in the Test Solutions Group
decreased $34,871 or 21% compared to $166,150 for the same period
last year due to reduced development activities. R&D expenses in
the VCO Products Group were down $30,880 or 39% compared to $79,380
for the same period last year due to reduced development
activities.
SG&A expenses as a percent of revenues decreased to 24.1% in the
nine months ended December 31, 2002 as compared to 25.5% for the
same period last year. These expenses grew 32% compared to the
same period last year. The majority of this growth came from the
addition of Enon to our Defense Electronics Group. Expenses in the
Defense Electronics Group for Q3 of FY03 were up $699,246 or 105%
during Q3 of FY03 compared to the same quarter last year. SG&A
expenses in the Test Solutions Group decreased $180,325 or 32%
compared to the same period last year due to reductions as a result
of lower sales. SG&A expenses in the VCO Products Group decreased
$41,195 or 16% compared to the same period last year due to reduced
spending from lower sales.
Net income for the nine months ended December 31, 2002 was
$965,808, or $.22 per share, compared to $611,708, or $.14 per
share during same period last year. Most of this increase was due
to the growth in our Defense Electronics Group offset by lower
operating income from our other Groups.
Financial Condition
The Company's working capital at December 31, 2002 was $6,691,461,
an increase of $623,521 from $6,067,940, the working capital at
March 31, 2002. The Company's current ratio was approximately 5.7
to 1 at December 31, 2002; it was approximately 5.5 to 1 at March
31, 2002.
Net cash of $1,202,797 was provided by operating activities during
the nine months ended December 31, 2002 as compared to $667,715
that was provided by operating activities during the year earlier
period. This was primarily due to net income and reduction of
payables in the current period. Net cash used by investing
activities during the nine months ended December 31, 2002 was
$313,448 as compared to $124,093 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 nine
months ended December 31, 2002 was $215,236 as compared to cash
provided of $25,040 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 increased $674,113 during
the current nine months as compared to an increase of $568,662 in
the year ago period.
In accordance with loans from a bank, the Company is required to
maintain a minimum net worth of at least $2,000,000, a ratio of
total debt to net worth not exceeding 1.25:1, and a debt coverage
ratio of not less than 1.25:1. At present, the Company does not
anticipate failing to comply with any of these financial ratios.
The Company also has a line of credit with the bank in the amount
of $1,500,000 million. As of December 31, 2002, there was no
outstanding balance on this line of credit.
We believe that cash and cash equivalents on hand, anticipated
future cash receipts, and borrowings available under our line of
credit will be sufficient to meet our obligations as they become
due for the next twelve months. However, a decrease in our sales
or demand for our products would likely adversely affect our
working capital amounts. As part of our business strategy, we
occasionally evaluate potential acquisitions of businesses,
products and technologies. Accordingly, a portion of our available
cash may be used at any time for the acquisition of complementary
products or businesses. These potential transactions may require
substantial capital resources, which, in turn, may require us to
seek additional debt or equity financing. There are no assurances
that we will be able to consummate any of these transactions.
There are no present plans to raise additional debt or equity
capital, nor is there a projected need to raise any such capital.
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/A for
its fiscal year ended March 31, 2002.
Item 3. Controls and Procedures.
Within the 90 days prior to the date of this report, the
Company carried out an evaluation, under the supervision and with
the participation of the Company's management, including the
Company's Chief Executive Officer and Chief Financial Officer, of
the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon the evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective. There were no significant
changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the date of
their evaluation.
Item 4. Submission of Matters to a Vote of Security Holders.
On October 30, 2002, the Company held its Annual Meeting of
Shareholders (the "Meeting"). At the Meeting, the Company's
shareholders voted on the election of three directors. The
shareholders voted for the election of Richard S. Kalin, David
Siegel and Emanuel Kramer to serve as Directors of the Company
until the next annual meeting of shareholders and until their
successors are duly elected and qualify.
At the Meeting, the Company's shareholders also voted on a
proposal to change the Company's name to "Micronetics, Inc." The
following table sets forth the results of such vote:
Proposal Affirmative Votes Negative Votes
-------- ----------------- ---------------
Approval of Name Change 3,950,766 4,324
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.
99.1 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
99.2 Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(b) Reports on Form 8-K.
On November 27, 2002, the registrant filed an amendment to its
Current Report on Form 8-K dated April 10, 2002.
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 hereunto duly authorized.
MICRONETICS, INC.
(Registrant)
Dated: February 14, 2003 By:/s/Richard S. Kalin
---------------------
Richard S. Kalin,
President (Principal
Executive Officer)
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard S. Kalin, certify that:
1. I have reviewed this quarterly report on Form 10-QSB
of Micronetics, Inc.;
2. Based on my knowledge, this quarterly report does
not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and
other financial information included in this quarterly report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and
for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and have:
(a) designed such disclosure controls and
procedures to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filling date of this quarterly report (the "Evaluation
Date"); and
(c) presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I
have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board
of directors (or persons performing the equivalent functions):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors
any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that
involves management or other employees who have a significant role
in the registrant's internal controls.
6. The registrant's other certifying officers and I
have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: February 14, 2003
/s/Richard S. Kalin
-----------------------------------
Name: Richard S. Kalin
Title: Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Dennis Dow, certify that:
1. I have reviewed this quarterly report on Form 10-QSB
of Micronetics, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and
other financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:
(a) designed such disclosure controls and procedures
to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which
this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior
to the filling date of this quarterly report (the "Evaluation Date");
and
(c) presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's auditors any
material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls.
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: February 14, 2003
/s/Dennis Dow
----------------------------------
Name: Dennis Dow
Title: Vice President-Finance
(Principal Financial Officer)