Still looking at MCFR, the strangest company,They started selling stuff to PTT holland, another AT&T in the EU. Now after trading in the range of 1 1/4 to 2 1/4 for 2 years why the sudden intrest in it all off a sudden? Another VOCLF type? Another NETG? Another flash in the pants? Another buyout?
mcfr.com
We at MicroFrame are dedicated to helping you solve your network problems, such as securely accessing, monitoring and managing your network elements at remote sites to reduce down-time, and increase revenues.
MicroFrame's remote network maintenance, management, and access security software and hardware protects companies' information-sensitive and mission-critical networks. Its family of Secure Network Systems/2000 (including the Sentinel 2000 and Manager 2000) offer customers a variety of features such as remote alarm, environmental conditions, and telecommuter monitoring. Together Lucent and MCI account for almost 35% of revenues. Products are marketed worldwide in countries such as Australia, Hong Kong, and Sweden, although almost 80% of sales are to US customers.
bigcharts.com
MICROFRAME INC
Filed on Feb 17 1998
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
A number of statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. These risks and uncertainties include, but are not limited to, the recent introduction and the costs associated with, a new family of products; dependence on the acceptance of this new family of products; risks related to technological factors; potential manufacturing difficulties; dependence on third parties; a limited customer base; and liability risks.
Results of Operations -
Revenues for the quarter ended December 31, 1997 were $3,051,537 as compared with revenues of $1,826,698 for the same quarter of the previous fiscal year, or an increase of approximately 67%. The increase was primarily due to increased international shipments of the Company's Sentinel 2000 product. The Company continued to see interest in the other member of the family of SNS products, the Manager 2000.
The Company's revenues were positively impacted by increased Domestic sales and as a result of increased shipments to the European market, including shipments under its contract with PTT Holland. Shipments to Europe were approximately $800,000 for the three months ended December 31, 1997 compared to $434,000 for the quarter ended December 31, 1996. The Company is aggressively pursuing customers in this market place.
The Company's cost of goods sold increased from $762,434 for the quarter ended December 31, 1996 to $1,366,641 for the quarter ended December 31, 1997 as a result of increased business. Cost of goods sold as a percentage of sales increased from 41% for the previous comparable fiscal period to 44% for this fiscal period, due to the fact that the company is still experiencing a shift from its mature product lines to the newer Sentinel product line. The Company continues to focus on lowering the costs related to the newer products as they begin to mature and will eventually see the benefits from manufacturing efficiencies.
Research and development expenses, net of capitalized software development, remained relatively constant with a slight increase from $236,701 in the quarter ended December 31, 1996 to $254,796 in the current fiscal quarter. Research and development expenses as a percentage of revenues decreased from 12% to 8%, primarily due to increased revenues in the current fiscal period. Selling, general and administrative expenses increased approximately 55% from $781,852 for the prior year's comparable fiscal period to $1,213,739 for the fiscal period ended December 31, 1997, however, as a percentage of sales decreased to approximately 39% compared to 42% in the previous quarter. This increase represents lower general and administrative costs offset by increases in the Company's selling expenses including an increase in the number of direct sales people, as we embark on an aggressive growth plan. The Company has begun to see increased revenues as a result of these increased selling expenses.
The Company's income from operations increased 338% to $220,829 for the three months ended December 31, 1997 compared to $50,350 for the same period a year ago. Due to increased sales, the reduction in interest costs to the Company and the benefit for income tax of $144,690, the net income for the period ended December 31, 1997 increased 626% to $365,519 compared to net income of $50,350 for the quarter ended December 31, 1996. At March 31, 1997 the Company had provided a partial valuation allowance against its existing deferred tax assets. At December 31, 1997 the Company has reversed approximately $204,000 of valuation allowance relating to its net operating losses and it has recorded a provision for other operational temporary difference items. The expiration dates for its net operating losses range from the years 2001 through 2011.
First Nine Months of Fiscal 1998 Versus First Nine Months Fiscal 1997 -
Revenues for the nine months ended December 31, 1997 were $7,069,810 as compared with revenues of $5,264,210 for the comparable period of the previous fiscal year, or an increase of approximately 34%. This improvement is due to the success of the Company's new flagship product, the Sentinel 2000, increased shipments into the European market, and the expanding domestic customer base.
The Company's revenues for the nine months ended December 31, 1997 were positively impacted by increased Domestic sales and as a result of increased shipments to the European market, including shipments under its contract with PTT Holland. Shipments to Europe were approximately $1,800,000 for the nine months ended December 31, 1997 compared to $802,000 for the nine months ended December 31, 1996. The Company is aggressively pursuing customers in this market place.
The Company's cost of goods sold increased to $3,153,739 for the quarter ended December 31, 1997 compared to $2,016,324 for the quarter ended December 31, 1996 as a result of increased shipment levels. Cost of goods sold as a percentage of sales increased from 38% for the previous comparable fiscal period to 44% for this fiscal period, primarily due to the increased sales volume of the Company's newer product line. The Company expects to see increased benefits as the products mature and by continuing to improve purchasing and materials management systems.
Research and development expenses, net of capitalized software development, increased from $664,711 in the nine months ended December 31, 1996 to $722,144 in the current fiscal period, an increase of 8%. Research and development expenses as a percentage of revenues decrease slightly from approximately 12% to 10%. Selling, general and administrative expenses increased 24% from $2,464,871 for the prior year's comparable fiscal period to $3,075,161 for the nine months ended December 31, 1996. This increase was primarily the result of added sales personnel in the second quarter. However as a percentage of revenues, selling, general and administrative expenses decreased from 46% for the previous period to 43% for the current fiscal period.
The Company's had income before taxes of $129,801 for the nine months ended December 31, 1997 compared to income of $123,175 during the nine months ended December 31, 1996, primarily due to increased sales. The Company expects that benefits will continue to arise as a result of the increase in the sales force as well as increased volumes and manufacturing efficiencies gained thereby as the products continue to mature. The net income for the period was $282,211 compared to net income of $123,175 for the same period in 1996. At March 31, 1997 the Company had provided a partial valuation allowance against its existing deferred tax assets. At December 31, 1997 the Company has reversed approximately $220,000 of valuation allowance relating to its net operating losses and it has recorded a provision for other operational temporary difference items. The expiration dates for its net operating losses range from the years 2001 through 2011.
Financial Condition and Capital Resources -
During the first nine months of fiscal year 1998, the Company recorded net income of approximately $282,000. Included in this income were non-cash charges of approximately $314,000 for depreciation and amortization. As a result, during the first nine months of fiscal year 1998, the Company's financial condition remained relatively stable.
The Company's operations provided approximately $54,500 of cash, which included a use of cash of approximately $55,000 to satisfy its New York State tax settlement. The Company also utilized approximately $300,000 of cash for capital and software-related expenditures and utilized approximately $30,000 of cash to pay down its long-term debt.
On August 30, 1997, the Company's line of credit agreement with United National Bank of Bridgewater, New Jersey
expired. In November 1997 the Company successfully negotiated with United National to provide the Company with a $1,000,000 line of credit, collateralized by accounts receivable of the Company, to finance future working capital requirements. As of February 6, 1998, the Company has not utilized this line.
Based on its current cash and working capital position, as well as its available line of credit, the Company believes that it will have sufficient capital to meet its operational needs over the next twelve months.
In fiscal 1998, the Company is required to adopt the provisions of the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131, "Segment Reporting" ("SFAS 131"), which is effective for financial statements for annual periods ending after December 15, 1997. SFAS 131 establishes standards for the disclosure requirements relative to operating segments. The Company is evaluating the disclosure requirements of the recently issued statement. |
