-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DFFvt/FLE/EgzZFYi4XSJT3ExlPlN/YjeIMfgQsFwxdLM1CvdXKIptsOuWoNfIFJ Nxp9GRRs9C/QqCd9EixuCQ== 0000874788-98-000009.txt : 19980220 0000874788-98-000009.hdr.sgml : 19980220 ACCESSION NUMBER: 0000874788-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980219 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICEL CORP CENTRAL INDEX KEY: 0000874788 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 112882297 STATE OF INCORPORATION: NY FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11020 FILM NUMBER: 98545353 BUSINESS ADDRESS: STREET 1: 170 53RD STREET CITY: BROOKLYN STATE: NY ZIP: 11232 BUSINESS PHONE: 7184928400 MAIL ADDRESS: STREET 1: 445 CENTRAL AVE CITY: CEDARHURST STATE: NY ZIP: 11516 10-Q 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 Quarterly Report Under to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: December 31, 1997 Commission File Number: 1-11020 Micel Corp. -------------------------------------------------------------------- (Exact name of Small Business Issuer as specified in its charter) NEW YORK 11-2882297 -------------------------------------------------------------------- (State of other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 445 Central Ave., Cedarhurst New York 11516 -------------------------------------------------------------------- (Address of Principal executive offices) (Zip Code) (516) 569-1234 -------------------------------------------------------------------- (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 Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for 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 practicable date. Common Stock, Par Value $.01 5,900,380 ------------------------------------------------------ (Title of each Class) (Outstanding at December 31, 1997) 2 MICEL CORP. AND SUBSIDIARIES CONSOLIDATED REPORT TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements (Unaudited): Condensed Consolidated Balance Sheets as of December 31, 1997 and September 30, 1997. 3 Condensed Consolidated Statements of Income (loss) for the three and three months ended December 31, 1997 and 1996. 4 Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 1997 and 1996. 5 Condensed Consolidated Statements of Changes in Shareholders' Equity. 6 Notes to Condensed Consolidated Financial Statements 7-8 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations 9-12 PART II - OTHER INFORMATION 13 Exhibit 27 14 Signatures 15 3 MICEL CORP. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION MICEL CORP. AND SUBSIDIARIES ------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31 SEPTEMBER 30 1997 1996 (UNAUDITED) (AUDITED) ------------------- ------------------- ASSETS ---------- CURRENT ASSETS Cash and cash equivalents $ 829,282 $ 491,000 Accounts receivable 830,326 521,332 Inventories 929,375 894,992 --------- ----------- Total current assets 2,588,983 1,907,324 ---------- --------- Investment in Affiliated Company 5,295 19,745 Note Receivable From affiliated Company 135,000 100,000 Deposits With Insurance Companies and Pension Funds 212,125 196,988 PLANT AND EQUIPMENT (net) 281,061 210,398 ---------- --------- Total assets 3,222,464 2,434,455 ========= ========= LIABILITIES AND SHAREHOLDERS EQUITY - ------------------------------------------------------------ CURRENT LIABILITIES: Short term bank credit 231,173 7621 Current maturities of long term debt 17,598 18,416 Accounts payable and accrued liabilities 948,004 933,188 Advances from customers 242,057 323,838 ---------- ----------- Total current liabilities 1,438,832 1,283,063 ------- ------- LONG TERM DEBT: net of current maturities 19,385 23,312 ACCRUED SEVERANCE PAY 261,655 251,062 Minority Interest 38,683 0 ------- ------- Total liabilities 1,758,555 1,557,437 -------- ---------- SHAREHOLDERS' EQUITY: Common Stock 59,004 57,504 Additional Paid in Capital 6,831,860 6,533,386 Capital Reserve 432,981 - Accumulated deficit (5,859,936) (5,713,872) ----------- ----------- Total shareholders' equity 1,463,909 877,018 ---------- -------- Total liabilities and shareholders' equity 3,222,464 2,434,455 ========= ========= 4 MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) 3 Months Ended December 31 ----------------------------------- 1997 1996 (Unaudited) (Unaudited) ----------- ----------- Sales 746,889 1,815,182 Cost Of Sales 423,161 1,488,438 --------- --------- Gross Profit 323,728 326,744 ---------- ---------- Research and Development Expenses (net) 208,434 126,701 Marketing and Selling Expenses (net) 55,237 48,850 General and Administrative Expenses 223,153 104,061 ------- ------- Total operating expenses 486,824 279,612 ---------- --------- Income (loss) From Operations (163,096) 47,132 Interest and Other Income 12,978 1,685 Interest and Other Expense (9,832) (35,141) Minority Interest in Losses of Subsidiaries 28,336 Equity in Loss of Affiliates (14,450) (4,686) ------- --------- Net Loss (146,064) (8,990) ====== ====== 5 MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 3 MONTHS ENDED DECEMBER 31 -------------------------------- 1997 1996 (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net income (loss) (146,064) 8,990 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation & amortization 24,828 21,774 Minority interest in losses of subsidiaries (28,336) Income from affiliated company 14,450 Changes in operating assets and liabilities: Accounts receivable (308,994) (194,525) Inventories (34,383) (63,863) Accounts payable and accrued liabilities 14,816 263,889 Advances from customers (81,781) (57,693) Accrued severance pay (4,544) 10,941 --------- -------- Net cash provided by operating activities (550,008) (10,487) ------- --------- CASH FLOWS From Investing Activities: Purchase of equipment (95,489) (31,347) Investment in affiliated company (35,000) -------- --------- Net cash used in investing activities (130,489) (31,347) CASH FLOWS From Financing Activities: Repayment of long term debt (4,745) (40,312) Credit 223,552 57,409 Issuance of common stock 799,972 400,000 --------- -------- Net cash provided by financing activities 1,018,779 417,097 Increase (decrease) In Cash and Cash Equivalents 338,282 375,263 CASH AND CASH EQUIVALENTS, Beginning of Period 491,000 81,089 -------- --------- CASH AND CASH EQUIVALENTS, end of period 829,282 456,352 ======= ======= Supplemental Cash Flow Information: Interest Paid: 6,134 22,791 6 MICEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 Additional paid in Capital & Common Stock Capital Accumulated Total No. of Shares Value Reserves Deficit ------------ ----- ------------- ----------- ----- Balance, September 30, 1997 5,750,380 57,504 6,533,386 (5,713,872) 877,018 Issuance of Common Stock (Net of issuance expenses) in a private placement 150,000 1500 298,474 - 299,974 Capital Reserves Resulting from issuance of subsidiary shares to a third party 432,981 - 432,981 Net Loss (146,064) (146,064) ------- ----- ----------- ---------- ------ Balance, December 31, 1997 5,900,380 59,004 7,264,841 (5,859,936) 1,463,909 MICEL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet at December 31, 1997, the consolidated statements of Income (loss) for the three months ended December 31, 1997 and 1996, and the consolidated statements of cash flows for the three months ended December 31, 1997 and 1996, have been prepared by the Company, and are unaudited. Reference should be made to the notes to the Company's September 30, 1997 consolidated financial statements for additional details of the company's consolidated financial condition, results of operations and cash flows. The details in those notes have not changed except as a result of normal transactions in the interim. All adjustments (of normal recurring nature) which are, in the opinion of management, necessary to a fair presentation of the results of the interim period have been included. The results of operations for the period ended December 31, 1997, are not necessarily indicative of the operating results for the full year. 2. Common Stock During the first quarter of 1998, the company raised $300,000 in a private placement of Common Stock at $2.00 per share or 150,000 shares. 3. RadioTel RadioTel, Ltd., was established to develop and manufacture point to point and point to multipoint wireless radio links for various applications. RadioTel expects to supply the full spectrum of frequencies up to 38 GHz with data rates from E1 to 16 E1 including ATM. RadioTel will attempt to address the market with unique low cost and innovative solutions to wire-line services. The radio module which it hopes to develop is expected to be suitable for digital wireless systems, mainly for telecommunication applications such as rural telephones and wireless local loop ("WLL") systems in remote locations (simplified wireless telephone systems for remote subscribers utilizing radio frequencies for connection into the public telephone network). The financial statements of RadioTel are consolidated into the Company's financial statements. 8 During the quaretr the company signed an investment agreement according to which the investor is to invest $1,000,000 in consideration for 16% of RadioTel shares. Through December 31, 1997, the investor invested $500,000 out of the $1,000,000, causing Micel's share in RadioTel to be diluted to 91%. As a result, Micel had a capital reserve of $432,981. 4. MICEL Wireless Corp. MICEL Wireless Corp. (formerly Milink), a Florida corporation and a joint venture between the Company and Export Business & Services, Inc. ("EBS"), is an international telecommunications company engaged in the sourcing, marketing and sales of wireless telephone terminals and other related products. MICEL Wireless currently represents certain manufacturing companies and telecom agencies as a purchasing agent and sales representative. MICEL Wireless Corp. designs, manufactures, and sells fixed cellular terminals for WLL applications in developing countries. The Company capitalizes on the technical capabilities of RadioTel, the existing knowledge of the cellular and wireless local loop markets and a network of distribution channels. Micel Wireless' initial focus has been in Latin America, where Micel Wireless expects to take immediate advantage of existing WLL opportunities. The Company owns 50% of MICEL Wireless. Refer to the Company's Form 10-KSB for the period ended September 30, 1997 for additional details. The Company is committed to provide to Micel Wireless a working capital loan in the amount of $150,000. As of December 31, 1997 the outstanding loan to Micel Wireless is $135,000. The working capital loan shall bear interest at 12% per annum, payable annually. The loan will become due after 12 months from the date of the loan or when otherwise mutually agreed upon by the Company and EBS. At a time and terms to be mutually agreed upon among the Company, EBS and MICEL Wireless, the working capital loan may be converted into nonvoting preferred stock of MICEL Wireless. Micel Wireless commenced activities in the first quarter of Fiscal 1997, in which the Company lent Micel Wireless $100,000. The Company applies the equity method of accounting for its investments in Micel Wireless. 5. Legal Proceedings In July 1994, the Company commenced a civil action in Israel in the approximate amount of $3,000,000 against M/A Com and Hillel Weinstein for false representations made by M/A Com and Dr. Weinstein in connection with the purchase of MicroKim Ltd. from M/A Com and for subsequent damages resulting from such misrepresentations. Dr. Weinstein is no longer a defendant or counter claimant in this action as a result of an agreement reached on May 27, 1996. On March 30, 1997, the judge granted M/A Com's motion for the cncellation of the company's request for "out of boundries" jurisdiction. On July 23, 1997, the company resubmitted the request and it was granted. In November 1997, the complaint and accompanying papers were again served on M/A Com. 6. Recently Issued Accounting Standards In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, Earning Per Share. This Statement establishes standards for computing and presenting earning per share (EPS), replacing the presentation of currently required primary EPS with a presentation of Basic EPS. For entities with complex capital structures, the statement requires the dual presentation of both Basic EPS and Diluted EPS on the face of the statement of operations. Under this new standard, Basic EPS is computed based on weighted average shares outstanding and excludes any potential dilution; Diluted EPS reflects potential dilution from the exercise or conversion of securities into common stock or from other contracts to issue common stock and is similar to the currently required fully diluted EPS, SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997,including interim periods, and earlier application is not permitted. When adopted, the Company will be required to restate its EPS data for all prior periods presented. The Company does not expect the impact of the adoption of this statement to be material to previously reported EPS amounts. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS General Impact of inflation, devaluation and fluctuation of currencies on the results operations. The Company's operations are conducted through its Israeli subsidiaries, MicroKim and RadioTel. A substantial portion of sales and purchases of materials are in, or linked to the United States dollar. Most of other expenses are linked to the Israeli Shekel. Transactions and balances originally denominated in dollars are presented at their original amounts. Transactions and balances in currencies other than the dollar are translated into dollars in accordance with the principles set forth in statement No. 52 of the Financial Accounting Standards Board. Fluctuations in the rate of exchange between the dollar and such other currencies result in the recognition of financial income or loss. The Company manages its Israeli operations with the object of protecting against material net financial loss in U.S. dollar terms from the impact of Israeli inflation and currency devaluation on its non - U.S. dollar assets and liabilities. In the three month period ended Dec 31, 1997, the Israeli Consumer Price Index ("ICPI") increased by 0.59% , as compared with a devaluation of the Shekel of 1.12% against the U.S dollar. To the extent the rate of devaluation of the shekel with respect to the U.S. dollar does not substantially offset the change in the rate of inflation in Israel, the expenses in, or linked to, the shekel will be impacted when translated to the U.S. dollar. There can be no assurance that the Government of Israel will devalue the shekel from time to time to offset the effects of inflation in Israel. Due to the weakness of the defense market, the company intends to place emphasis on increasing its commercial line of products and commercial market base. It is the policy of the Company to accept only those orders which are worthwhile economically and the Company has also tended to accept mainly larger orders for a limited number of projects, the most important of which tend to be with strategic partners as with the projects with ASDI and ArrayCom. A significant portion of the future revenues of the company will be dependent on the success of these two projects. 10 FINANCIAL CONDITION: In the first three months of Fiscal 1998 the company issued 150,000 shares of common stock in a private placement at $2.00 per share. The company's operations in the first three months of the fiscal year ending on September 30, 1998 ('Fiscal 1998') have been financed principally from revenues from sales, research and development grants and by a private placement of shares of common stock. The total amount of outstanding loans, credit facilities and guarantees from banks are approximately $614,800 and is secured by liens on certain of MicroKim's property and equipment, share capital and insurance rights, and by a secured interest in all of MicroKim's assets. This amount includes approximately $36,983 of long term borrowings from Israel Industrial Development Bank Ltd., to be repaid between 1997 and 2000. This also includes approximately $396,000 of performance guarantees pursuant to contracts with customers. In the three months ended December 31, 1997 net cash equivalents increased by $338,282 as a result of $799,974 proceeds from issuance of common stock and $223,552 from bank overdraft facilities, offset by the repayment of long term liabilities of $4745, purchases of fixed assets of $95,489, a loan to an affiliated company of $35,000 and in operating activities $550,010. The company is committed to fund RadioTel in the amount of $ 935,000 through October 30, 1998. In the event that additional funding is not provided to RadioTel, Micel's ownership in RadioTel may be diluted. 11 RESULTS OF OPERATIONS Three months ended December 31, 1997 compared to the three months ended December 31, 1996. Sales in the three months ended December 31 , 1997 were $746,889 as compared with $1,815,182 in the three months ended December 31, 1996. The sales of the first quarter of fiscal 1997 included the completion of a certain project, sales of which were $1,189,000. Cost of sales in the three months ended December 31, 1997 was 56.66% of sales or $423,161 as compared with 82% or $1,488,438 in the same period in 1996. The sales in the first quarter of Fiscal 1998 are not indicative of sales for the whole year. Research and development expenses (net) increased to $208,434 or 28% of sales in the three months ended Dec 31, 1997 from $126,701 or 16.96% of sales in the same period in 1996. The increase was caused by new research and development activities. Selling expenses in the three months ended December 31, 1997 were $55,237 or 7.4% of sales compared to $48,850 or 2.69% of sales in the same period in 1996. General and administrative expenses increased to $223,153 or 29.9% of sales in the three months ended December 31, 1997 from $104,061 or 5.7% of sales in the same period in 1996. The increase was mainly due to the operations of RadioTel. Financial expenses in the three months ended December 31, 1997 were $9,832 or 1.3% of sales compared with $35,141 or 1.9% of sales in the same period in 1996. Minority share in RadioTel losses amounted to $28,336 (see also paragraph 3 above). Company's share in losses of its 50% held affiliate, Micel Wireless, were $14,450 compared with $4,686 in the first quarter of 1996. In the three months ended December 31, 1997, the company reported a loss of $146,066 In the same period in 1996, the Company incurred a loss of $38,142. The loss is attributable mainly to the operation of RadioTel. The inventories at December 31, 1997, were comprised of $498,083 raw materials and $431,292 work in process as compared to $500,741 raw materials and $272,047 work in process at December 31, 1996. The company is committed to pay royalties to the office of the Chief Scientist of the State of Israel ("OCS") in respect to products under development for which the OCS participated by way of grant. The royalty is computed at the rate of 2%-3% of proceeds from sales of such products up to the amount of such grant. 12 MICEL CORP. AND SUBSIDIARIES PART II - OTHER INFORMATION Item 1. Legal Proceeding Reference is made to Form 10-KSB for the year ended September 30, 1997. Item 2. Changes in Securities None. Item 3. Default on Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K Exhibit 27 14 MICEL CORP. AND SUBSIDIARIES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on behalf by the undersigned hereunto duly authorized. MICEL CORP. Registrant Date: February 19th, 1998 By: /s/ Ron Levy ------------------------------- President and Chief Executive and Financial Officer EX-27 2
5 1-MO SEP-30-1998 DEC-31-1997 829282 0 830326 42000 929375 2588983 2387441 2106380 3222464 1438832 0 0 0 59004 1404905 3222464 746889 746889 423161 423161 486824 163096 9832 (146064) 0 (146064) 0 0 0 (146064) (0.01) 0
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