-----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, D8W6jWFpLMNS/hmdgYhcUOUG6n7/ajC2VNH2MRBdM+YQ/pnKFXchxHLwIn5TaQbw kxVFrv9pwSXo973v70KPtQ== 0000874788-00-000025.txt : 20000523 0000874788-00-000025.hdr.sgml : 20000523 ACCESSION NUMBER: 0000874788-00-000025 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000522 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: 10QSB SEC ACT: SEC FILE NUMBER: 001-11020 FILM NUMBER: 641231 BUSINESS ADDRESS: STREET 1: 445 CENTRAL AVENUE CITY: CEDARHURST STATE: NY ZIP: 11232 BUSINESS PHONE: 5165691234 MAIL ADDRESS: STREET 1: 445 CENTRAL AVE CITY: CEDARHURST STATE: NY ZIP: 11516 10QSB 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: March 31, 2000 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) 569-0606 ------------------------------------------------------------------- (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 6,287,880 ------------------------------------------------------ (Title of each Class) (Outstanding at March 31, 2000) MICEL CORP. AND SUBSIDIARIES CONSOLIDATED REPORT TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements: Condensed consolidated balance sheets as of March 31, 2000 (Unaudited) and September 30, 1999 (Audited). 3-4 Condensed Consolidated Statements of operations for the six months ended of March 31, 2000 and 1999 (Unaudited). 5 Condensed Consolidated Statements of Cash Flows for the six months ended of March 31, 2000 and 1999 (Unaudited). 6-7 Condensed Consolidated Statements of Changes in Shareholders' Equity. 8 Notes to Condensed Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations 10-11 PART II - OTHER INFORMATION 12 Signatures 13 Exhibit 27 14 MICEL CORP. AND SUBSIDIARIES PART I - FINANCIAL INFORMATION MICEL CORP. AND SUBSIDIARIES --------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS U.S dollars in thousands March 31 September 30 2000 1999 (UNAUDITED) (AUDITED) ------------------- ---------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 456 $ 360 Trade receivables 494 467 Other accounts receivable 38 606 Inventories 740 833 --------------- --------------- Total current assets 1,728 2,266 --------------- ------- -------- INVESTMENT IN AFFILIATED COMPANIES 3,766 119 -------------- -------------- DEPOSITS WITH INSURANCE COMPANIES AND PENSION FUNDS 415 326 -------------- -------------- MINORITY INTEREST - 4 -------------- -------------- PROPERTY PLANT AND EQUIPMENT, NET 285 815 --------------- ----------- ---- Total assets $ 6,194 $ 3,530 ======== ======== LIABILITIES AND SHAREHOLDERS EQUITY ------------------------------------------------------------ CURRENT LIABILITIES: Short-term bank credit 3 28 Current maturities of long term debt 1 7 Accounts payable and accrued liabilities 624 1,099 Advances from customers 33 199 --------------- --------------- Total current liabilities 761 1,333 --------------- --------------- ACCRUED SEVERANCE PAY 487 415 PREFERRED SHARES OF SUBSIDIARY 5,648 1,292 --------------- --------------- Total liabilities 6,135 3,040 --------------- --------------- SHAREHOLDERS' EQUITY DEFICIENCY: Common Stock 63 59 Additional paid-in capital 7,831 7,779 Receipt on account of shares - 775 Accumulated deficit (8,596) (7,894) Deferred compensation of subsidiary - (229) --------------- --------------- Total shareholders' equity (deficiency) (702) 490 --------------- --------------- Total liabilities and shareholders' equity (deficiency) $ 6,194 $ 3,530 ========= ========= MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS U.S dollars in thousands 6 months ended March 31 3 months ended March 31 2000 1999 2000 1999 (Unaudited) (Unaudited) (Unaudited) (Unaudited) -------------- -------------- --------------- -------------- Sales 1,736 938 698 589 Cost of sales 1,111 528 574 355 ------------- ------------- -------------- -------------- Gross profit 625 410 124 234 ------------- ------------ -------------- ------------- Research and development expenses, net 904 812 385 255 Selling & Marketing expenses 402 120 198 64 General and administrative expenses 642 438 286 242 ------------- ------------- ------------ -- ------------- Total operating expenses 1,948 1,370 869 ------------- -------------- ------------- ------------ Operating loss (1,323) (960) (745) (327) Financial income (expenses) and other ( 294) 36 (232) (1) ------------- ------------- ------------- --------- ---- Loss before income from affiliate company and minority interest (1617) (924) (977) (328) Income from affiliated company 140 91 43 121 Minority interest in losses of subsidiary 775 508 390 177 -------------- ------------- ------------- ------ -------- Net loss $ (702) $ (325) (544) $ (30) ======== ======= ======== ========= Basic and diluted loss per share $0.12 $0.06 $0.09 $0.01 Weighted average number of ======== ======= ======== ========= shares used in computing basic and diluted loss per share 6,029,547 5,900,380 6,158,713 5,900,380 ======== ======== ======== ========= MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S dollars in thousands 6 MONTHS ENDED MARCH 31 ------------------------------------- ---------- 2000 1999 (Unaudited) (Unaudited) --------------- --------------- Cash Flows From Operating Activities: Net loss (702) (325) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 116 89 Gain on sale of equipment (3) - Equity in gain of affiliated company (140) (98) Amortization of deferred compensation issuance of stock options. 135 152 Minority interest in losses of subsidiary ( 775) (508) Compensation due to conversion of - Interest loan in subsidiary 212 - Changes in operating assets and liabilities: Increase in accounts receivable (39) (232) Decrease (increase) in inventories 93 (112) Increase in accounts payable and accrued liabilities 274 128 Increase (decrease) in advances from customers (66) 78 Increase (decrease) in accrued severance pay 16 ( 9) Increase in preferred Shares of Subsidiary - 133 ----------- --------------- Net cash used in operating activities (879) ( 704) --------------- --------------- Cash flows From investing activities: Purchase of fixed assets (333) (136) Proceeds from sale of equipment - Proceeds from note receivable 70 - --------------- --------------- Net cash used in investing activities (260) (136) Cash flows from financing activities: Repayment of long term debt (7) ( 8) Proceeds from shareholders loan in subsidiary 1,150 Net changes in short-term bank overdraft facilities 67 (42) Issuance of subsidiary shares to third party - 437 Receipt on account - 385 Receipt on account of subsidiary shares to minority 25 - ------------ ------------ Net cash provided by financing activities 1,235 772 ------------- --------------- Increase in cash and cash equivalents 96 (68) Cash and cash equivalents at the beginning of period 360 1,428 ------------- - ------------- Cash and cash equivalents at the end of period $ 456 $ 1,360 ======= ========= MICEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)FOR THE SIX MONTHS ENDED MARCH 31, 2000 Common stock . Deferred Additional Receipts on compensation No Value paid accounts of Accumulated from issuance of shares in capital shares deficit of stock option Total ------------ ---------- --------------- ------------ --------------- ------------------ --------- Balance, September 30, 1999 5,900,380 $59 $ 7,779 $ 775 $ (7,894) $ (229) $490 Issuance of common stock 297,500 4 771 - - - Amortization of deferred Compensation from issuance of Stock options - - 135 - - - 135 Adjustment to carrying amount Of RadioTel investment as a result Of private placement (854) 229 (625) Loss for the period - - - (702) (702) ------------ ---------- --------------- ----------- -------- ------- ------------- ----------- Balance, March 31, 2000 6,287,880 $ 63 $ 7,831 $ - $ (8,596) $ - $(702) MICEL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet at March 31, 2000, the consolidated statements of loss for the six and three months ended March 31, 2000 and 1999, and the consolidated statements of cash flows for the six months ended March 31, 2000 and 1999, have been prepared by the Company, and are unaudited. Reference should be made to the notes to the Company's September 30,1999 audited 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. 2. Micel's Subsidiaries: a. Microkim Founded in 1972, by M/A Comm, Microkim is dedicated to providing advanced products for a broad range of military and commercial applications. The company is a leading supplier of portable field testers and simulators, RF and microwave systems, sub-systems and components for application in Communication, Electronic warfare, Radar, Test Equipment and Simulators/Testers. Microkim is 100% held by the parent . b. RadioTel RadioTel Ltd. was established in 1996 in Israel, to develop a managed wireless Synchronous Digital Hierarchy (SDH) transmission network. Through the use of novel techniques and state of the art technologies the Company hopes to extend wideband wireline/fiber services into the wireless domain. These wireless networks are used to extend the existing and future infrastructure while at the same time supplying full transparency of all protocols (i.e. ATM (Asynchronous Transfer Mode), IP (Internet Protocol), and SDH) with the same reliability and uninterrupted service of wireline services. RadioTel was 51.5% held by the Company until March 2000. In March 27,2000 RadioTel completed its private placement of preferred shares to third parties and existing shareholders and Micels ownership position fell below 50 percent. Consequently, while RadioTel had previously been fully consolidated, it has been accounted for under the equity method of accounting from 27 March,2000 forward. On March 27,2000,the shareholders of RadioTel converted a loan in the amount of $1,200,000(including $50,000 of Micel) into 41,986 Class B Preferred shares of NIS 0.01 par value each. As a result of the conversion of shareholders loan, RadioTel recorded $212,000 as financial expenses. As a part of the agreement, RadioTel has granted to these shareholders 20,992 warrants to purchase Ordinary shares at the exercise price of $28.58. On March 27,2000,RadioTel issued 307,299 Class C Preferred shares of NIS 0.01 par value each to new investors in consideration of approximately $10,333,000. As part of the agreement RadioTel has granted to these investors 17,844 warrants to purchase Ordinary shares at the exercise price of par value, exercisable until March 27,2001. As a result of an issuance of preferred shares of RadioTel to third parties and existing shareholders the Company recorded deferred gain of $4,356,902. c. MICEL Wireless Corp. MICEL Wireless Corp., a U.S. corporation located in Florida, 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 Wireless Local Loop (WLL) applications in developing countries. Micel Wireless is jointly held by the parent and by Export Business &Services Inc. (EBS). ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS GENERAL 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 denominated in U.S. dollars are presented in their original amounts. Non-dollar transactions and balances have been remeasured to U.S. dollars accordance with statement No. 52 of the Financial Accounting Standards Board (FASB). All transactions gains and losses from remeasurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statements of operations as financial income or expenses, as appropriate. FINANCIAL CONDITION: The company's operations in the six months of the fiscal year ending on September 30, 2000 ('Fiscal 2000') have been financed principally from revenues from sales, research and development grants and by a convertible loan of subsidaiary. The total amount of outstanding loans, credit facilities and guarantees from banks is approximately $63,000 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 $ 1,400 of short-term borrowings from Israel Industrial Development Bank Ltd. This also includes approximately $59,000 of performance guarantees pursuant to contracts with customers. In the six months ended March 31, 2000 net cash equivalents increased by $ 96,000 as a result of $1,150,000 minority loan that RadioTel obtained. On March 27,2000, RadioTel converted a loan into 41,986 Class B Preferred shares of NIS 0.1 par value each. The loan was linked to dollar and bore annual interest at the rate of Libor+2%. Net cash further increased $25,000 loan receipt on account of subsidiary shares to third party, $67,000 short-term bank overdraft facilities and reduced by $879,000 in operating activities and $260,000 used in investing activities. RESULTS OF OPERATIONS Six months ended March 31, 2000 compared to the six months ended March 31, 1999. Sales in the six months ended March 31, 2000 were $1,736,431 as compared with $938,068 in the six months ended March 30, 1999. The increase in sales compared to the 1999 period resulted from the completion of products and their delivery in the 2000 period. Sales in the six months included $1,430,950 and $305,481 revenues recognized by Microkim and RadioTel, respectively. Cost of sales in the six months ended March 31, 2000 was 64% of sales or $1,110,980 as compared with 56% or $528,149 in the same period in 1999. The increase in cost of sales is mainly caused by the devaluation of the dollar. Most of the sales are linked to the dollar and the cost of sales is linked to the Israeli shakel. The increase in cost of sales was also due to the type of products that were delivered in the 2000 period which has a higher cost of sale than those delivered in the 1999 period. The cost of sales fluctuates for all the products. Gross research and development expenses were $1,702,515 in the six months ended March 31,2000 and $1,237,515 of sales in the same period in 1999.The increase in the research and development expenses is caused mainly by the increase in the research and development activities of RadioTel. In the 2000 period the grants and participation were $798,557 compared to $425,329 in the same period in 1999. Selling & marketing expenses in the six months ended March 31, 2000 were $402,421 or 23% of sales compared to $120,155 or 13% of sales in the same period in 1999. The increase was due to new sales and marketing activities performed by RadioTel. General and administrative expenses in the six months ended March 31,2000 were $645,364 or 37% of sales compared to $438,303 or 47% in the same period in 1999. The increase in the cost was mainly due to the increase in the rental expenses in the new location of the Israeli subsidiaries and the increase of legal fees in RadioTel. Financial expenses in the six months ended March 31, 2000 were $293,913 compared with income of $36,477 in the same period in 1999. The increase in the expense was caused by the compensation from conversion of shareholders loan of RadioTel and due to interest expenses associated with bank line of credit and shareholders loan. Company's share in the income of its 50% held affiliate, Micel Wireless, for the first six months of fiscal year 2000, was $140,122 compared with the income of $91,017 in the first six months of fiscal 1999. In the six months ended March 31, 2000, the company reported a loss of $702,000. In the same period in 1999, the Company had a loss of $324,781. This increase in a loss was primarily due to losses of RadioTel. Investment in affiliated companies increased from $119,468 as of September 30,1999 to $3,776,228 as of March 31,2000. This increase was due to RadioTel was 51.5% held by the Company until March 2000. In March 27,2000 RadioTel completed its private placement of preferred shares to third parties and existing shareholders and Micels ownership position fell below 50 percent. Consequently, while RadioTel had previously been fully consolidated, it has been accounted for under the equity method of accounting from March 27,2000 forward. Preferred shares of subsidiary increased from $1,292,232 as of September 30,1999 to $5,649,134 as of March 31,2000. This increase is caused by deferred gain of $4,356,902, which was recorded as a result of an issuance of preferred shares of RadioTel to third parties and existing shareholders. The inventories at March 31, 2000, consisted of $485,201 raw materials and $254,950 work in process as compared to $486,515 raw materials and $346,176 work in process at September 30, 1999. 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%-5% of proceeds from sales of such products up to the amount of such grant. Royalties paid during the six months ended March 31,2000 and 1999 totaled $29,382 and $6,830, respectively. 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, 1999. 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 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: May 22th, 2000 By: /s/ Ron Levy ------------------------------- President and Chief Executive and Financial Officer EX-27 2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 6-MO SEP-30-2000 March-31-2000 456,130 0 531,703 0 740,151 1,727,983 2,203,689 1,919,053 6,193,846 760,615 0 0 0 62,879 765,988 6,193,846 1,736,431 1,736,431 1,110,980 1,110,980 1,948,897 1,323,446 293,913 701,882 0 701,882 0 0 0 701,882 (0.12) 0
-----END PRIVACY-ENHANCED MESSAGE-----