-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, aArGn7T4Iqr7GmS7cP569yvFWnGZTzOEkHQvsjeV6hff9M1zXTR2mQpFSZVTbu7z MUqmDoAvzSK/WsFP+zqXRA== 0000215155-95-000002.txt : 19950830 0000215155-95-000002.hdr.sgml : 19950830 ACCESSION NUMBER: 0000215155-95-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950815 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASTROCOM CORP CENTRAL INDEX KEY: 0000215155 STANDARD INDUSTRIAL CLASSIFICATION: 3576 IRS NUMBER: 410946755 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-08482 FILM NUMBER: 95564312 BUSINESS ADDRESS: STREET 1: 2700 SUMMER STREET N E CITY: MINNEAPOLIS STATE: MN ZIP: 55413-2820 BUSINESS PHONE: 6123787800 MAIL ADDRESS: STREET 2: 2700 SUMMER ST NE CITY: MINNEAPOLIS STATE: MN ZIP: 55413 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB /X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934, for the quarterly period ended June 30, 1995, or / / Transition report under Section 13 or 15(d) of the Exchange Act, for the transition period from to COMMISSION FILE NUMBER 0-8482 ASTROCOM CORPORATION (Exact name of small business issuer as specified in its charter) MINNESOTA 41-0946755 (State or other jurisdiction (I.R.S. Employer Ident. No.) of incorporation or organization) 2700 SUMMER STREET N.E. 55413-2820 MINNEAPOLIS, MINNESOTA (zip code) (Address of principal executive office) (612) 378-7800 (Issuer's telephone number) NOT APPLICABLE (Former name, address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 / / APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court Yes / / No / / APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 5,170,023
ASTROCOM CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30 1995 1994 Net Revenues $ 582,000 $ 854,000 Cost of Products Sold 402,000 572,000 Net Profit 180,000 282,000 Expenses: Selling and administrative expense 299,000 341,000 Research and development expense 102,000 66,000 Interest expense 28,000 19,000 Total Expenses 429,000 426,000 Income (loss) before taxes (249,000) (144,000) Income tax 0 0 Net income (loss) $ (249,000) $(144,000) Net income (loss) per share $ ( .05) $( .04) Share used in the computation 4,908,924 4,193,416 See notes to financial statements STATEMENTS OF OPERATIONS (UNAUDITED) ASTROCOM CORPORATION Six Months Ended June 30 1995 1994 Net Revenues $1,408,000 $2,069,000 Cost of Products Sold 888,000 1,300,000 Net Profit 520,000 769,000 Expenses: Selling and administrative expense 579,000 706,000 Research and development expense 211,000 142,000 Interest expense 50,000 39,000 Total Expenses 840,000 887,000 Income (loss) before taxes (320,000) (118,000) Income tax 0 0 Net income (loss) $ (320,000) $(118,000) Net income (loss) per share $ ( .06) $ ( .03) Share used in the computation 4,907,482 4,185,998 See notes to financial statements BALANCE SHEETS (UNAUDITED) ASTROCOM CORPORATION June 30, December 31, 1995 1994 ASSETS CURRENT ASSETS Cash $ 2,000 $ 8,000 Accounts receivable, less allowance for doubtful accounts of $15,000 at 3/31/95 and $15,000 at 12/31/94. 363,000 468,000 Inventories Finished products and work in-process 328,000 342,000 Purchased parts, materials and supplies 344,000 392,000 Total Inventories 672,000 734,000 Prepaid expenses 16,000 15,000 TOTAL CURRENT ASSETS 1,053,000 1,225,000 OTHER ASSETS Other 20,000 20,000 Demonstration, sample & repair inventory 94,000 94,000 PLANT AND EQUIPMENT Buildings 1,000 1,000 Machinery and equipment 1,184,000 1,173,000 Office furniture and fixtures 639,000 639,000 Allowances for depreciation and amortization (deduction) (1,467,000) (1,433,000) TOTAL PLANT AND EQUIPMENT 357,000 380,000 TOTAL ASSETS $1,524,000 $1,719,000 See notes to financial statements June 30, December 31, 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 404,000 $ 394,000 Accounts payable 437,000 326,000 Employee compensation and other accrued 21,000 52,000 expenses Current maturities of long-term debt 134,000 156,000 and capital leases TOTAL CURRENT LIABILITIES 996,000 928,000 LEASE-SETTLEMENT COSTS 36,000 57,000 SUBORDINATED DEBT - NOTE B 200,000 200,000 STOCKHOLDERS' EQUITY Common Stock, par value $.10 a share - 506,000 486,000 authorized 10,000,000 shares - Note B Additional paid-in capital 3,491,000 3,433,000 Retained earnings (deficit) (3,705,000) (3,385,000) TOTAL STOCKHOLDERS' EQUITY 292,000 534,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,524,000 $1,719,000 Note: The balance sheet at December 31, 1994 has been derived from the audited financial statements at that date. See notes to financial statements STATEMENTS OF CASH FLOWS ASTROCOM CORPORATION Six Months Ended June 30 1995 1994 OPERATING EXPENSES Net income (loss) $ (320,000) $ (118,000) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 66,000 66,000 Changes in operating assets and liabilities: Accounts receivable 105,000 5,000 Reorganization and contingent liabilities 61,000 0 Inventories and prepaid expenses 80,000 152,000 Accounts payable and accrued expenses (27,000) (135,000) Other assets 0 20,000 Net cash provided by operating activities (8,000) (10,000) INVESTING ACTIVITIES Purchases of plant and equipment (43,000) (6,000) Net cash (used in) provided by investing activities (43,000) (6,000) FINANCING ACTIVITIES Conversion of debt to equity - Note C 66,000 0 Payments on bank notes payable 10,000 (24,000) Payments on capital lease obligations (31,000) (12,000) Net cash (used in) provided by financing activities 45,000 (31,000) Increase (Decrease) in cash (6,000) (47,000) Cash at beginning of quarter 8,000 55,000 Cash at end of quarter $ 2,000 $ 8,000 See notes to financial statements
NOTES TO FINANCIAL STATEMENTS ASTROCOM CORPORATION JUNE 30, 1995 NOTE A - ACCOUNTING POLICIES The accompanying financial statements have been prepared in accordance with the instructions to Form 10-QSB. Accordingly, they do not include all information and footnotes necessary for a complete presentation of financial position, results of operations and statement of cash flows. In the opinion of management, all adjustments necessary for a fair presentation of results have been made and registrant believes such presentation is adequate to make the information presented not misleading. For further information, refer to the financial statements and footnotes included in registrant's annual report on Form 10-KSB for the year ended December 31, 1994. NOTE B - TRANSACTION WITH HANROW FINANCIAL GROUP, LTD. Registrant has an $200,000 subordinated note payable to a related party, Hanrow Financial Group, Ltd. (Hanrow). The note bears interest at 13% and matures on April 5, 1996. The note is secured by a second security position in all assets of registrant, and contains various covenants relating to registrant's operations, financial condition and payment of dividends. As of December 31, 1994, registrant was in violation of certain covenants related to working capital, capital base and the allowance for doubtful accounts. Registrant was granted a waiver for the covenant violations as of December 31, 1994 and for the period from December 31, 1994 to January 1, 1996. As a result of the covenant violations being waived, the subordinated note continues to be classified as a long-term liability. During 1994, registrant issued 13,000 shares of common stock in Hanrow in lieu of a cash payment of $6,000 for accrued interest on the subordinated note. NOTE C - TRANSACTION WITH RELATED PARTY. Effective November 18, 1994, registrant entered into a debenture purchase agreement with a related party. Under the terms of the Agreement, the related investor purchased $66,000 of registrant's unsecured debentures. The debentures were due on December 31, 1995, but, at holder's option, could be converted into common stock at the rate of $.25 per share, prior to December 31, 1995. On June 30, 1995, the holder converted $66,000 of the debentures into shares of registrant and received a warrant to purchase 132,000 shares of registrant, at the rate of $.50 per share. Management's Discussion and Analysis of the Results of Operations. Comparison of Second Quarters 1995 and 1994 SALES. Net revenues for the quarter ended June 30, 1995, totaled $582,000, a decrease of 32% from the total of $854,000 for the same quarter of 1994. The decrease was the result of a lower volume of unit sales, due primarily to decreased orders from one of registrant's major customers. The gross margin decreased from 33% in 1994 to 31% in 1995. The decrease can be attributed to higher parts costs and a lower volume of revenue during the second quarter of 1995. EXPENSES. Selling and administrative expenses decreased 12% from $341,000 in the quarter ended June 30, 1994 to $299,000 in the quarter ended June 30, 1995. The decrease was due primarily to a reduction in the number of sales and administrative personnel during the first six months of 1995. Research and development expenses increased 55% from $66,000 in 1994 to $102,000 in 1995, due primarily to an increase in personnel during the first six months of 1995 and a higher level of spending on engineering prototype materials. Interest expense increased 47% from $19,000 in 1994 to $28,000 in 1995, due to higher borrowing levels and higher interest rates in 1995. NET LOSS. Registrant reported a net loss from operations of $249,000 for the quarter ended June 30, 1995, as compared to a net loss of $114,000 in the second quarter of 1994. The difference can be attributed primarily to the reduction in revenues in the second quarter of 1995. CORPORATE LIQUIDITY. During the first half of 1995, registrant was not in compliance with the Hanrow subordinated debt loan covenants. Hanrow has not declared a default under the agreement. Liquidity was maintained during the first half of 1995 by funding from the bank line of credit. Management believes it will maintain short-term liquidity in 1995 by managing inventory and factoring international accounts receivable. Long-term liquidity is dependent upon returning to profitable operations that generate adequate cash flow to meet current obligations on a timely basis. COMPARISON OF SIX MONTHS ENDED JUNE 30, 1995 WITH THE SIX MONTHS ENDED JUNE 30, 1994 SALES. Net revenues for the six months ended June 30, 1995, totaled $1,408,000, a decrease of 32% from the total of $2,069,000 for the same period of 1994. Gross margins remained stable from 37% in 1994 to 37% in 1995. EXPENSES. Selling and administrative expenses decreased 18% from $706,000 in the first six months of 1994, to $579,000 in the first six months of 1995. The decrease was due primarily to a reduction in the number of sales and administrative personnel during the first six months of 1995. Research and development expenses increased 49% from $142,000 in 1994 to $211,000 in 1995, due primarily to an increase in personnel during the first six months and a higher level of spending on engineering prototype materials. Interest expense increased 28% from $39,000 during the first six months of 1994 to $50,000 in the first six months of 1995. This increase can be attributed to higher borrowing levels and higher interest rates in 1995. NET LOSS. Registrant reported a net loss of $320,000 for the first six months of 1995, as compared to a net loss of $118,000 in the first six months of 1994. The difference can be attributed primarily to the reduction in revenues in the first six months of 1995. PART II OTHER INFORMATION ITEM 5 1. Robert Brandenberg resigned as Vice President of Sales and Marketing on June 30, 1995. SIGNATURES 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 thereunto duly authorized. Dated: August 11, 1995 ASTROCOM CORPORATION (Registrant) By:S. Albert D. Hanser S. Albert D. Hanser, President By:Brien W. Johnson Brien W. Johnson, Vice President of Finance -----END PRIVACY-ENHANCED MESSAGE-----