-----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, NaT3TgNqQDW6HxO+l9CPFl4C1F20LL1jCTidcV/Ua8CMCn7/ONmXlVr+zuisxeRD 3CbWNlbv2m6r3eEiJ5/6Qg== 0000874788-98-000015.txt : 19980515 0000874788-98-000015.hdr.sgml : 19980515 ACCESSION NUMBER: 0000874788-98-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 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: 98619325 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 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: March 31, 1998 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 6,000,380 ------------------------------------------------------ (Title of each Class) (Outstanding at March 31, 1998) 2 MICEL CORP. AND SUBSIDIARIES CONSOLIDATED REPORT TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements:Condensed onsolidated Balance Sheets as of March 31, 1998 (Unaudited) and September 30, 1997. 3 Condensed Consolidated Statements of Income (loss) for the six and three months ended March 31, 1998 and 1997 (Unaudited). 4 Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 1998 and 1997 (Unaudited). 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 MARCH 31 SEPTEMBER 30 1998 1997 (UNAUDITED) (AUDITED) ------------------- ------------------ ASSETS ---------- CURRENT ASSETS Cash and cash equivalents $ 690,816 $ 491,000 Accounts receivable 778,380 521,332 Inventories 802,097 894,992 --------- ----------- Total current assets 2,271,293 1,907,324 ---------- --------- Investment in Affiliated Company 21,686 19,745 Note Receivable From affiliated Company 135,000 100,000 Deposits With Insurance Companies and Pension Funds 249,657 196,988 PLANT AND EQUIPMENT (net) 350,037 210,398 ---------- --------- Total assets 3,027,673 2,434,455 ========= ========= LIABILITIES AND SHAREHOLDERS EQUITY - ------------------------------------ CURRENT LIABILITIES: Accounts payable and accrued liabilities 1,043,665 933,188 Bank Overdraft Facilities 13,172 7,621 Current maturities of long term debt 16,789 18,416 Advances from customers 128,821 323,838 ---------- ----------- Total current liabilities 1,202,447 1,283,063 ------- ------- ACCRUED SEVERANCE PAY 311,379 251,062 LONG TERM DEBT: net of current maturities 15,376 23,312 Minority Interest 53,983 0 ------- ------- Total liabilities 1,583,185 1,557,437 -------- ---------- SHAREHOLDERS' EQUITY: Common Stock 60,004 57,504 Additional paid-in capital 7,742,435 7,031,626 Capital Reserve 372,584 Accumulated deficit (6,249,552) (5,848,812) Deferred Compensation (480,983) (363,300) ----------- ----------- Total shareholders' equity 1,444,488 877,018 ---------- -------- Total liabilities and shareholders' equity 3,027,673 2,434,455 ========= ========= 4 MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) 6 Months Ended March 31 3 Months Ended March 31 ------------------------------- -------------------------- 1998 1997 1998 1997 (Unaudited) (Unaudited) (Unaudited) (Unaudited) ----------- ----------- ---------- ----------- Sales 1,526,281 2,651,030 779,392 835,848 Cost Of Sales 873,469 2,009,976 450,308 521,538 --------- --------- --------- --------- Gross Profit 652,812 641,054 329,084 314,310 ---------- ---------- --------- --------- Research and Development Expenses, net 562,079 248,153 353,645 106,634 Selling Expenses (net) 120,921 63,081 65,684 29,049 General and Administrative Expenses 534,041 240,222 310,888 136,161 ------- ------- --------- --------- Total operating expenses 1,217,041 551,456 730,217 271,844 ---------- --------- --------- --------- Income (loss) From Operations (564,229) 89,598 (401,133) 42,466 Interest and Other Income 18,783 9,791 5,805 8,103 Interest and Other Expense (45,817) (41,545) (35,985) (6,404) Income (Loss) of Subsidiaries 1,941 (3,704) 16,391 982 Minority Interest in Losses of Subsidiaries 188,582 160,246 ------- --------- --------- --------- Net Income (Loss) (400,740) 54,140 (254,676) 45,147 ====== ====== ====== ====== Loss per share ($0.07) ($0.05) ------- --------- -------- --------- Shares used in computing loss per share 5,875,380 5,812,880 ---------- --------- --------- --------- 5 MICEL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 6 MONTHS ENDED MARCH 31 ----------------------------- 1998 1997 (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net income (400,740) 54,140 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation & amortization 51,016 45,021 Amortization of deferred compensation 95,626 Gain on sale of equipment (10,593) Minority interest in losses of subsidiaries (188,582) Loss (gain) in affiliated company (1,941) 3,704 Changes in operating assets and liabilities: Accounts receivable (257,048) 455,690 Inventories 92,895 (118,898) Accounts payable and accrued liabilities 110,477 (232,692) Advances from customers (195,017) 26,726 Accrued severance pay 7,648 6,980 --------- -------- Net cash provided by operating activities (696,259) 240,671 --------- --------- CASH FLOWS From Investing Activities: Purchase of equipment (190,655) (95,294) Proceeds from sale of equipment 10,593 Investment in affiliated company (35,000) (100,000) -------- --------- Net cash used in investing activities (215,062) (195,294) CASH FLOWS From Financing Activities: Repayment of long term debt (9,563) (86,516) Net Changes in short-term bank overdraft facilities 5,551 (263,544) Issuance of common stock 500,000 400,000 Issuance of Subsidiary Shares to Minority 615,149 --------- -------- Net cash provided (used in) by financing activities 1,111,137 49,940 Increase (decrease) In Cash and Cash Equivalents 199,816 95,317 CASH AND CASH EQUIVALENTS, Beginning of Period 491,000 81,089 -------- --------- CASH AND CASH EQUIVALENTS, end of period 690,816 176,406 ======= ======= Supplemental Cash Flow Information: Interest Paid: 31,119 22,791 6 MICEL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE SIX MONTHS ENDED MARCH 31, 1998 Common Additional Paid Accumulated Deferred Total Stock No. Value in Capital and Deficit Compensation of Shares capital reserve ---------- ----- --------------- ------------ ----------- ----- Balance, September 30, 1997 5,750,380 57,504 7,031,626 (5,848,812) (363,300) 877,018 Issuance of Common Stock (Net of issuance expenses) in a private placement 250,000 2,500 497,500 - - 500,000 Capital Reserves resulting form Issuance of subsidiary shares to a third party - - 372,584 - - 372,584 Deferred Compensation 213,309 (213,309) Amortization of Deferred Compensation 95,626 95,626 Net Income (400,470) - (400,470) ------- ----- -------------- ------------ ------------------ Balance, March 31, 1998 6,000,380 60,004 8,115,019 (6,249,282) (480,983) 1,444,758 MICEL CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated balance sheet at March 31, 1998, the consolidated statements of Income (loss) for the six and three months ended March 31, 1998 and 1997, and the consolidated statements of cash flows for the six months ended March 31, 1998 and 1997, 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. 2. Common Stock During the first and second quarter of 1998, the company raised $500,000 in a private placement of Common Stock at $2.00 per share. 3. 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, Simulators/Testers. b. RadioTel RadioTel Ltd., located in Israel, was established to develop managed wireless SDH transmission network. Through the use of novel techniques and state of the art technologies the Company's mission is 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, IP, SDH) with the same reliability and uninterrupted service of wireline services. On March 31, 1998, RadioTel supplied an ISDN (Integrated Service Digital Network) Multi-Link, for technology evaluation, to MadenTech Consulting Engineering Inc. The financial statements of RadioTel are consolidated into the Company's financial statements. 8 Since September 30 ,1997, Clal Venture Capital Fund Limited Partnership invested $619,580 of its total investment commitments which amounts to $1,000,000. As a result of these investments Micel's share in RadioTel was diluted to 76.46% and a capital reserve of $372,584 was created as a result. On April 1, 1998, the company signed a share purchase agreement with H.B. Radio Investment Limited Partnership (HB), under which HB would invest over time $750,000 into RadioTel and would receive 11.11% of RadioTel issued share capital, on a fully diluted basis. HB has an option to invest additional $250,000 for which it would receive 3.57% of RadioTel issued share capital, on a fully diluted basis. The option expires on May 31, 1998. In the event HB exercises its option HB will hold 14.28% of RadioTel issued share capital, on a fully diluted basis. c. MICEL Wireless Corp. MICEL Wireless Corp., 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 March 31, 1998 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. The Company applies the equity method of accounting for its investments in Micel Wireless. 4. 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 cancellation of the company's request for "out of boundaries" 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. During the second quarter of 1998, M/A Com filed a motion to cancel the "out of boundaries" Jurisdiction service and requested to take the deposition of a former officer of the company. The motion has been fixed for hearing on July 5, 1998. 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. 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. 10 FINANCIAL CONDITION: In the six months of Fiscal 1998 the company raised $500,000 through the issuance of 250,000 shares of common stock in a private placement at $2.00 per share. The company's operations in the first six months of the fiscal year ending on September 30, 1998 ('Fiscal 1998') have been financed principally from revenues from sales, research and development grants, by a private placement of shares of common stock and by a private placement in RadioTel. The total amount of outstanding loans, credit facilities and guarantees from banks is approximately $388,000 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 $32,165 of long term borrowings from Israel Industrial Development Bank Ltd., to be repaid between 1997 and 2000. This also includes approximately $343,000 of performance guarantees pursuant to contracts with customers. In the six months ended March 31, 1998 net cash equivalents increased by $199,816 as a result of $1,115,149 proceeds from issuance of common stock (including issuance of common stock of consolidated company to a third party), $5551 from bank overdraft facilities and proceeds from sale of equipment of $10,593, offset by the repayment of long term liabilities of $9563, purchases of fixed assets of $190,655, a loan to an affiliated company of $35,000 and in operating activities $696,259. The company is committed to fund RadioTel in the amount of $735,000 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 Six months ended March 31, 1998 compared to the Six months ended March 31, 1997. Sales in the six months ended March 31, 1998 were $1,526,281 as compared with $2,651,030 in the six months ended March 31, 1997. The decrease in sales compared to the 1997 period resulted from the completion of a certain project in the first quarter of fiscal 1997 representing sales of $1,189,000. Cost of sales in the six months ended March 31, 1998 was 57.23% of sales or $873,469 as compared with 75.8% or $2,009,976 in the same period in 1997. Research and development expenses (net) increased to $562,079 or 37% of sales in the six months ended March 31, 1998 from $248,153 or 9% of sales in the same period in 1997. The increase was caused by new research and development activities performed by RadioTel. Selling expenses in the six months ended March 31, 1998 were $120,921 or 7.91% of sales compared to $63,081 or 2.37% of sales in the same period in 1997. The increase was mainly due to the increase in operations of RadioTel. General and administrative expenses increased to $534,041 or 35% of sales in the six months ended March 31, 1998 from $240,222 or 9.0% of sales in the same period in 1997. The increase was mainly due to the increase in operations of RadioTel. Financial expenses in the six months ended March 31, 1998 were $45,817 or 3% of sales compared with $41,545 or 1.57% of sales in the same period in 1997. Minority share in RadioTel losses amounted to $188,582 (see also note 3b above). Company's share in profit of its 50% held affiliate, Micel Wireless, for the first six months of fiscal year 1998, were $1,941 compared with a loss of $3,704 in the first half of 1997. In the six months ended March 31, 1998, the company reported a loss of $400,470. In the same period in 1997, the Company had profit of $54,140. The loss is attributable mainly to the operations of RadioTel. The inventories at March 31, 1998, consisted of $448,086 raw materials and $354,011 work in process as compared to $450,518 raw materials and $444,474 work in process at September 30, 1997. 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. Royalties were paid during the first six months of fiscal 1998, in the amount of $15,709. 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: May 14th, 1998 By: /s/ Ron Levy ------------------------------- President and Chief Executive and Financial Officer EX-27 2
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