-----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, QlHeBOaxDUFLA0BO8t2BKKcF+GLpxvAouUmyshx7vdxv6aUCnjBdUiS7JCpOMFXq WPCtbVZmP79L62ACheYm9g== 0000215155-00-000005.txt : 20000516 0000215155-00-000005.hdr.sgml : 20000516 ACCESSION NUMBER: 0000215155-00-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASTROCOM CORP CENTRAL INDEX KEY: 0000215155 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER COMMUNICATIONS EQUIPMENT [3576] IRS NUMBER: 410946755 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-08482 FILM NUMBER: 634739 BUSINESS ADDRESS: STREET 1: 3500 HOLLY LN N. STREET 2: SUITE 60 CITY: PLYMOUTH STATE: MN ZIP: 55447 BUSINESS PHONE: 6123787800 MAIL ADDRESS: STREET 1: 3500 HOLLY LN N. STREET 2: SUITE 60 CITY: PLYMOUTH STATE: MN ZIP: 55447 10QSB 1 United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2000 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities 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 of (I.R.S. Employer Identification No.) incorporation or organization) 3500 Holly Lane North, Suite 60, Plymouth, Minnesota 55447-1284 (Address of principal executive office) (Zip Code) (612) 378-7800 (Issuer's telephone number) 2700 Summer Street N.E., Minneapolis, Minnesota 55413-2820 (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 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 Indicate by check mark 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 26,014,161 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
ASTROCOM CORPORATION BALANCE SHEETS March 31, 2000 December 31, 1999 Assets Current assets: Cash and cash equivalents 1,610,763 557,637 Accounts receivable, less allowance 96,613 57,639 Inventories 424,739 289,985 Prepaid expenses 31,031 28,780 Total current assets 2,163,146 934,041 Property and equipment Property and equipment 717,794 720,642 Accumulated depreciation (611,191) (597,394) Net property & equipment 106,603 123,248 License agreements, net 76,766 62,900 Other assets 10,000 10,000 Total assets 2,356,515 1,130,189 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable 186,361 128,106 Accrued expenses 117,803 117,006 Current portion of lease settlement costs 33,570 33,881 Total current liabilities 337,734 278,993 Lease settlement costs 0 7,907 Shareholders' equity Preferred stock 200,000 200,000 Common stock 2,601,020 1,752,020 Additional paid-in capital 9,066,877 8,331,887 Accumulated deficit (9,849,116) (9,440,618) Total shareholders' equity 2,018,781 843,289 Total liabilities and shareholders' equity 2,356,515 1,130,189 See accompanying notes to financial statements. Astrocom Corporation Statements of Operations (Unaudited) Three Months Ended March 31 2000 1999 Net Sales 192,014 529,302 Cost of products sold 159,395 377,920 Gross profit 32,619 151,382 Operating expenses Selling and administrative 298,277 245,071 Research and development 146,918 140,724 Total operating expenses 445,195 385,795 Operating loss (412,576) (234,413) Other income (expense) Interest income 9,376 5,025 Interest expense (781) (2,592) Other expense (368) (397) Total other income (expense) 8,227 2,036 Net loss before taxes (404,349) (232,377) Taxes 1,151 13 Net loss (405,500) (232,390) Less preferred stock dividends 3,000 3,000 Loss applicable to common shares (408,500) (235,390) Loss per common share - basic and diluted (0.02) (0.02) Weighted average number of common shares outstanding 20,313,831 14,999,161 See accompanying notes to financial statements. Astrocom Corporation Statements of Cashflows (Unaudited) Three Months Ended March 31, 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net loss (405,500) (232,390) Adjustments to reconcile net less to net cash used in operating activities: Depreciation and amortization 36,719 41,036 Loss on disposal of equipment 299 0 Changes in operating assets and liabilities: Accounts receivable (38,975) (38,906) Inventories (134,753) 91,064 Prepaid expenses (2,250) 17,865 Accounts payable 58,255 2,708 Accrued expenses (2,203) 8,386 Net cash used in operating activities (488,406) (110,237) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of equipment (2,931) (2,682) Purchase of license agreements (31,009) (25,000) Proceeds from sale of equipment (299) 0 Net cash used in investing activities (34,239) (27,682) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of stock 1,583,990 0 Payments on lease settlement obligations (8,219) (7,690) Cash provided by financing activities 1,575,771 (7,690) Net decrease in cash 1,053,126 (145,609) Cash at beginning of period 557,637 549,337 Cash at end of period 1,610,763 403,728 See accompanying notes to financial statements.
Astrocom Corporation Notes to Financial Statements March 31, 2000 1. Basis of Presentation The financial statements in this Form 10-QSB have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of financial position, results of operations and cash flows. These financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report on Form 10-KSB for the year ended December 31, 1999. 2. Inventories Inventories are stated at the lower of cost or market, determined on an average cost basis. Inventories at March 31, 2000 and December 31, 1999 consisted of the following: March 31, 2000 December 31, 1999 Raw materials 355,271 228,430 Work in process 204,877 208,144 Finished goods 113,975 98,962 Less obsolescence reserve (249,383) (245,551) 424,740 289,985 3. Loss Per Share The Company follows Financial Accounting Standards Board Statement No. 128, "Earnings Per Share." Basic earnings per share exclude the dilutive effect of options, warrants and convertible securities, while diluted earnings per share include such effects. For all periods presented, the Company's basic and diluted loss per share are the same because the effects of all options, warrants and convertible securities were antidilutive. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This Report contains certain forward-looking statements that project or estimate future events. When used in this Form 10-QSB, the words "believes," "expects," "anticipates," "intends," and similar expressions are intended to identify forward-looking statements. These statements are subject to various risks and uncertainties which could cause actual results to differ materially from historical results or those currently projected. Readers are cautioned not to place undue reliance on these forward-looking statements. RESULTS OF OPERATIONS The following table sets forth selected information derived from the Company's interim statement of operations expressed as percentages of net sales: Three Months Ended % Increase March 31, (Decrease) 2000 1999 Net Sales 100.0 100.0 (63.7) Cost of Sales 83.0 71.4 (57.8) Gross Profit 17.0 28.6 (78.5) Selling and Administrative 155.3 46.3 21.7 Research and Development 76.5 26.6 4.4 Operating Loss (214.9) (44.3) 76.0 Other Expense 4.3 0.4 304.0 Net Loss (211.2) (43.9) 74.5 Net Sales. Net sales for the quarter ended March 31, 2000 totaled $192,014, a decrease of 63.7% from $529,302 for the same quarter of 1999. The decline in sales was the result of reduced demand from a few significant customers and a continued slowdown from all customers. To address this decline, the Company is continuing to focus on new product development targeted at a niche market strategy. This strategy will reposition the Company's products to a market where manufacturing, sales channel size and pricing are less important competitive factors. The Company is also in the process of engaging and training a network of Manufacturers' Representatives. The Company expects that shipment of new products in future quarters will reverse this trend of declining sales. Gross Profit. Gross profit margin decreased to 17.0% in the first quarter from 28.6% for the same period last year. This decrease is attributable to the lower sales volume and the resulting increase in labor and overhead as a percentage of sales. Gross margins will continue to be affected by sales volume, product mix and the distribution channel used. Operating Expenses. Selling and administrative expenses increased 21.7% to $298,277 from $245,071 in the same period last year. Administrative expenses decreased slightly because of reduced reliance on outside professional services. Sales and Marketing expenses increased by 103% in the first quarter of 1999, due to increased sales activity and training of the network of Manufacturers' Representatives. Research and development expenses increased 4.4% to $146,918 in the first quarter of 2000 from $140,724 during the same period in 1999. The Company expects research and development expenses to increase in future quarters as we further expand new product development. Other Income and Expense. Other income, net, was $8,227 for the period ending March 31, 2000 compared to $2,036 for the same period in 1999; interest expense also decreased to $781 from $2,592, respectively, for the same periods. The higher interest income was due to an increased amount of cash earning interest in the first quarter of 2000; the higher interest expense for the same period in 1999 is attributable to payment of interest to a supplier. Net Loss. The Company reported a net loss of $405,500 for the quarter ended March 31, 2000, compared to a net loss of $232,290 in the first quarter of 1999. The increased loss is primarily the result of reduced sales and increased expenditures on Sales and Marketing. LIQUIDITY AND CAPITAL RESOURCES From December 27, 1999, through March 13, 2000, the Company sold 11,000,000 shares (2,525,000 shares in 1999) of common stock to accredited investors in a Regulation D private placement, resulting in net proceeds of $2,081,440. The proceeds will be used primarily for working capital. Of said 11,000,000 shares, 4,560,000 shares were sold by R.J. Steichen Co. pursuant to the terms of an Agency Agreement under which the Company paid R.J. Steichen & Co. a commission of $118,560 and issued to it an Agent's Warrant for 456,000 shares of the Company's common stock. Net working capital increased to $1,823,882 for the quarter from $655,048 on December 31, 1999. Cash increased to $1,610,763 on March 31, 2000 from $557,637 on December 31, 1999. Management remains focused on running profitable operations that generate adequate cash flow to meet current obligations on a timely basis. The Company currently believes that its available sources of funds will be adequate to finance current operations and anticipated investments for the next twelve months. PART II. OTHER INFORMATION Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-k None. SIGNATURES Pursuant to the requirement 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: May 15, 2000 ASTROCOM CORPORATION By:___/S/_________________ Ronald B. Thomas President and Chief Executive Officer By:___/S/_________________ John M. Bucher Director of Operations and Corporate Controller -----END PRIVACY-ENHANCED MESSAGE-----