Unassociated Document

0001144204-11-012218.txt : 20110302 0001144204-11-012218.hdr.sgml : 20110302 20110302115748 ACCESSION NUMBER: 0001144204-11-012218 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20101217 ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20110302 DATE AS OF CHANGE: 20110302 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEC ELECTRONICS CORP CENTRAL INDEX KEY: 0000049728 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 133458955 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-34376 FILM NUMBER: 11655060 BUSINESS ADDRESS: STREET 1: 105 NORTON ST CITY: NEWARK STATE: NY ZIP: 14513 BUSINESS PHONE: 3153317742 MAIL ADDRESS: STREET 1: PO BOX 271 CITY: NEWARK STATE: NY ZIP: 14513 FORMER COMPANY: FORMER CONFORMED NAME: INTERCONTINENTAL ELECTRONICS CORP DATE OF NAME CHANGE: 19730601 8-K/A 1 v212033_8ka.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

March 2, 2011 (December 17, 2010)

Date of Report (Date of earliest event reported)

IEC ELECTRONICS CORP.

(Exact Name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

0-6508	13-3458955
(Commission File Number)	(IRS Employer Identification No.)

105 Norton Street, Newark, New York 14513

(Address of principal executive offices)(Zipcode)

(315) 331-7742

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note:

This Current Report on Form 8-K is being filed to amend Item 9.01 of the Current Report on Form 8-K filed by IEC Electronics Corp. (the "Registrant") on December 23, 2010. In accordance with the instructions to Item 9.01 of Form 8-K, this amendment provides (1) the audited financial statements and unaudited interim financial statements of the business acquired, as required by Item 9.01(a) of Form 8-K, as well as (2) the unaudited pro forma financial information for the combination of the Registrant and the business acquired, using the Registrant's fiscal reporting periods, as required by Item 9.01(b) of Form 8-K and Rule 8-05 of Regulation S-X. As previously reported, the business acquired by a wholly owned subsidiary (CSCB, Inc.) of the Registrant consisted of substantially all of the a ssets of Southern California Braiding Co., Inc. (SCB).

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired

As required by Item 9.01(a) of Form 8-K, the following financial statements are attached as exhibits to this Current Report: (i) audited financial statements of SCB for the years ended December 31, 2009 and 2008 (Exhibit 99.1), and (ii) unaudited interim financial statements of SCB for the nine-month periods ended September 30, 2010 and 2009 (Exhibit 99.2).

(b) Pro Forma Financial Information

As required by Item 9.01(b) of Form 8-K, the unaudited pro forma consolidated financial information of the Registrant, reflecting the acquisition of substantially all of the assets of SCB, for the year ended September 30, 2010 and the three months ended December 31, 2010 are attached to this Current Report as Exhibit 99.3.

Exhibit No.		Page
23.1	Consent of Kushner, Smith, Joanou & Gregson, LLP
99.1	Audited Financial Statements of Southern California Braiding Co., Inc. for the Years Ended December 31, 2009 and 2008
99.2	Unaudited Interim Financial Statements of Southern California Braiding Co., Inc. for the Nine-Month Periods Ended September 30, 2010 and 2009
99.3	Unaudited Pro Forma Consolidated Income Statements for IEC Electronics Corp. and Subsidiaries for the Year Ended September 30, 2010 and the Three Months Ended December 31, 2010

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 hereunto duly authorized.

	IEC Electronics Corp.
	(Registrant)

Date: March 2, 2011	/s/ W. Barry Gilbert
	W. Barry Gilbert
	Chairman, Chief Executive Officer

EX-23.1 2 v212033_ex23-1.htm Unassociated Document

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

IEC Electronics Corp.

105 Norton Street

Newark, New York 14513

We hereby consent to the incorporation by reference in the previously filed Registration Statements on Form S-8 (File Nos. 333-103847, 333-122181 and 333-151218) of IEC Electronics Corp., of our report dated November 11, 2010 relating to the financial statements of Southern California Braiding Co., Inc. for the years ended December 31, 2009 and 2008, which are included in the Current Report on Form 8-K/A of IEC Electronics Corp. dated March 2, 2011.

/s/ Kushner, Smith, Joanou & Gregson, LLP

Kushner, Smith, Joanou & Gregson, LLP

Irvine, California

March 2, 2011

EX-99.1 3 v212033_ex99-1.htm Unassociated Document

Exhibit 99.1

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

FINANCIAL STATEMENTS

Years Ended December 31, 2009 and 2008

Table of Contents

	Page

Independent Auditor’s Report	2

Balance Sheets - December 31, 2009 and 2008	3

Statements of Income - Years Ended December 31, 2009 and 2008	4

Statements of Stockholders' Equity - Years Ended December 31, 2009 and 2008	5

Statements of Cash Flows - Years Ended December 31, 2009 and 2008	6

Notes to Financial Statements - December 31, 2009 and 2008	7

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Stockholders

Southern California Braiding Co., Inc.

(An “S” Corporation)

We have audited the accompanying balance sheets of Southern California Braiding Co., Inc. (an “S” Corporation) as of December 31, 2009 and 2008, and the related statements of income, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Southern California Braiding Co., Inc (An “S” Corporation) as of December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Kushner, Smith, Joanou & Gregson, LLP

November 11, 2010

Irvine, California

SOUTHERN CALIFORNIA BRAIDING CO., INC

(An "S" Corporation)

BALANCE SHEETS

December 31, 2009 and 2008

	2009			2008
ASSETS
Current assets:
Cash	$	57,628		$	935,209
Accounts receivable (less allowance for doubtful accounts of $25,000)		1,956,836			1,376,243
Inventory		1,051,716			1,094,789
Prepaid expenses		—			13,815
Total current assets		3,066,180			3,420,056

Property and equipment (Note 2)		2,976,814			2,324,729
Accumulated depreciation		(1,623,312	)		(1,229,930	)
Net property and equipment		1,353,502			1,094,799

Other assets:
Deposits		15,337			15,337
Due from officer (Note 3)		2,669,893			594,008
Total other assets		2,685,230			609,345

	$	7,104,912		$	5,124,200

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit (Note 4)	$	900,000		$	—
Accounts payable		751,414			136,861
Accrued expenses (Note 5)		58,623			709
Total liabilities		1,710,037			137,570

Commitments, related party and contingencies (Note 6)

Stockholders’ equity:
Common stock, no par value, 7,500 shares authorized, 1,000 shares issued and outstanding		24,604			24,604
Retained earnings		5,370,271			4,962,026
Total stockholders’ equity		5,394,875			4,986,630

	$	7,104,912		$	5,124,200

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

STATEMENTS OF INCOME

Years Ended December 31, 2009 and 2008

	2009					2008
				Percent					Percent
				of					of
				Net Sales					Net Sales

Net sales	$	12,051,941			100.0%	$	16,309,694			100.0%

Cost of goods sold		6,554,027			54.4		7,861,699			48.2

Gross profit		5,497,914			45.6		8,447,995			51.8

Operating expenses:
Selling and shipping		470,124			3.9		607,678			3.7
Officer salaries		2,149,924			17.9		4,711,863			28.9
General and administration		2,436,555			20.2		2,325,609			14.2
Total operating expenses		5,056,603			42.0		7,645,150			46.8

Operating income		441,311			3.6		802,845			5.0

Other income (expense):
Interest income		1,458			—		7,614			—
Interest (expense)		(24,196	)		(0.2)		(758	)		—
Total other income (expense)		(22,738	)		(0.2)		6,856			—

Income before income taxes		418,573			3.4		809,701			5.0

Provision for income taxes		10,328			0.1		8,916			0.1

Net income	$	408,245			3.3%	$	800,785			4.9%

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

STATEMENT OF STOCKHOLDERS' EQUITY

Years Ended December 31, 2009 and 2008

	Shares						Total
	Issued and		Common		Retained		Stockholders'
	Outstanding		Stock		Earnings		Equity

Balance at December 31, 2007		1,000	$	24,604	$	3,663,347	$	3,687,951

Prior period adjustment (Note 8)		—		—		497,894		497,894

Net income for the year ended December 31, 2008, as restated		—		—		800,785		800,785

Balance at December 31, 2008, as restated		1,000		24,604		4,962,026		4,986,630

Net income for the year ended December 31, 2009		—		—		408,245		408,245

Balance at December 31, 2009		1,000	$	24,604	$	5,370,271	$	5,394,875

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

STATEMENTS OF CASH FLOWS

December 31, 2009 and 2008

	2009			2008
Cash flows from operating activities:
Net income	$	408,245		$	800,785

Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		394,076			297,292
		802,321			1,098,077

Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable - net		(580,593	)		113,544
Inventory - net		43,073			659,530
Prepaid expenses		13,815			(13,815	)
Deposits		—			(3,255	)
Other current assets		—			1,650
Increase (decrease) in:
Accounts payable		614,553			69,392
Accrued expenses		57,914			(44,984	)
		148,762			782,062

Net cash provided by operating activities		951,083			1,880,139

Cash flows from investing activities:
Acquisition of property and equipment		(652,779	)		(310,830	)
Net cash used in investing activities		(652,779	)		(310,830	)

Cash flows from financing activities:
Proceeds from notes payable - shareholder		(2,075,885	)		(594,008	)
Net activity on revolving line of credit		900,000			(100,000	)
Net cash used in financing activities		(1,175,885	)		(694,008	)

Net (decrease) increase in cash		(877,581	)		875,301

Cash at beginning of year		935,209			59,908

Cash at end of year	$	57,628		$	935,209

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

NOTES TO FINANCIAL STATEMENTS

December 31, 2009 and 2008

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business - Southern California Braiding Co., Inc. (An “S” Corporation) (the “Company”) is primarily engaged in the manufacture of braided wire cables for the aerospace and defense industries. The Company is a California subchapter “S” Corporation.

FASB Codification - The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAP) that the Company follows to ensure consistent reporting of financial condition, results of operations, and cash flows. In June 2009, the FASB established the FASB Accounting Standards Codification (Codification) as the sole source of authoritative GAAP.

The Codification does not change how the Company accounts for its transactions or the nature of the related disclosures made. The change was made effective by the FASB for periods ending on or after September 15, 2009. The adoption of the Codification did not impact the Company’s financial position and results of operations. The Company has updated these financial statements to reflect the guidance in the Codification.

Concentrations of Credit Risk - The Company sells its products to customers throughout the United States. At December 31, 2009, one customer accounted for 76% of accounts receivable and 22% of net sales. At December 31, 2008, two customers accounted for 70% of accounts receivable and 75% of net sales. The Company performs ongoing credit evaluations on its customers and generally does not require collateral. Management does not expect any major business relationships to be lost or disrupted in the near future.

The Company maintains bank accounts with a major banking institution in which the deposits are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of December 31, 2008, the Company had balances in these accounts in excess of FDIC insurance limits. At times throughout the year ended December 31, 2009, the Company maintained balances in excess of FDIC insurance limits.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable - Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. Management determined the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial conditions and credit history, and current economic conditions.

Inventory - Inventory is stated at the lower of cost (first-in, first-out) or market value. Market value is considered as replacement cost. Inventory cost includes materials on hand and/or in transit.

Property and Equipment - Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method. The depreciation method is designed to amortize the cost of the assets over the estimated useful lives, in years, of the respective assets as follows:

Furniture and fixtures	7 years
Computers and equipment	5 to 7 years
Automobiles	5 years

Leasehold improvements are amortized over the life of the lease or the estimated useful life of the asset, whichever is shorter.

Maintenance and repairs are charged to expense as incurred. Renewals and improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.

Long-Lived Assets - Long-Lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows (undiscounted and without interest) expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The Company determined that no impairment loss needs to be recognized for the years ended December 31, 2009 and 2008.

Fair Value of Financial Instruments - For certain Company financial instruments, including cash, accounts receivable, due from related parties, prepaid expenses and other current assets, accounts payable, and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. The amounts shown for note payable to bank and term loan also approximate fair value because current interest rates offered to the Company for debt of similar maturities are substantially the same.

Revenue Recognition - Revenues from the sale of products are recognized upon shipment of products to customers and title passes. Right of return on products shipped when products received are damaged or not in compliance with the customer orders.

Shipping and Handling Fees and Costs - In accordance with Accounting Standards, revenue received from shipping and handling fees is reflected in net sales, and costs incurred from shipping and handling fees is reflected in cost of goods sold.

Advertising and Promotional Expenses - Advertising and promotional expenses are charged to expense as incurred. There were no advertising expenses for the years ended December 31, 2009 and 2008.

Income Taxes - The Company has elected “S” Corporation status for Federal and state income tax purposes. Under this provision, the Company does not pay Federal income taxes, and operating income and losses are passed through to the stockholders. State income taxes are provided for based upon earnings reported for financial statements purposes at the greater of the “S” Corporation rate of 1.5% or $800. The tax provision for the years ended December 31, 2009 and 2008 was $10,328 and $8,916, respectively.

Vacation Expense - Employees earn credits during the current year for future vacation benefits. The expense and corresponding liability are accrued when vacations are earned rather than when vacations are paid.

Leases - The Company leases certain property and equipment under operating and capital leases as defined by the Accounting Standards. Leases which meet certain criteria are classified as capital leases, and assets and liabilities are recorded at amounts equal to the lesser of the present value of the minimum lease payments or the fair value of leased properties at the beginning of the respective lease terms. Such assets are amortized in a manner consistent with the Company’s normal depreciation policies over the related lease terms or their economic useful lives. Interest expense relating to the lease liabilities is recorded at constant rates of interest over the terms of the leases. Leases which do not meet such criteria are classified as operating leases and related rentals are charged to expense as incurred.

Reclassification - The financial statements for the year ended December 31, 2008 reflect certain reclassifications, which have no effect on net income, to conform to classifications adopted at the year ended December 31, 2009.

Subsequent Events - The Company evaluated subsequent events through November 11, 2010, the date these financial statements were issued. With the exception of those matters discussed in Notes 4 and 9, there were no material subsequent events that required recognition or additional disclosure in these financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2009 and 2008:

	2009			2008

Computers and equipment	$	964,614		$	844,324
Furniture and fixtures		343,242			219,826
Automobiles		95,853			95,853
Leasehold improvements		1,573,105			1,164,726
		2,976,814			2,324,729

Less accumulated depreciation and amortization		(1,623,312	)		(1,229,930	)

	$	1,353,502		$	1,094,799

Depreciation expense and amortization expense for the years ended December 31, 2009 and 2008 totaled $394,076 and $297,292, respectively.

NOTE 3 - TRANSACTIONS WITH RELATED PARTIES

Due from Officer - At times throughout the year, the Company advances money to the majority stockholder. These amounts are considered “due on demand” and do not accrue interest. At December 31, 2009 and 2008, the Company had amounts due from the majority stockholder of $2,669,893 and $594,008, respectively.

NOTE 4 - LINE OF CREDIT AND SUBSEQUENT EVENT

The Company maintains a revolving line of credit with a bank to assure credit availability. The Company’s line of credit permits indebtedness of up to $1,500,000 and matures on June 2, 2010. Borrowings are secured by substantially all assets of the Company and are personally guaranteed by one of the stockholders. Interest is payable monthly, at the bank’s prime lending rate, (prime rate at December 31, 2009 was 3.25%) plus 1.00%. The outstanding balance on the line of credit at December 31, 2009 and 2008 was $900,000 and none, respectively. Subsequent to year-end, the Company’s line of credit was renewed which permits indebtedness up to $3,000,000, expires on June 2, 2011, and interest is payable monthly at the bank’s prime rate plus 0.75%.

Under the terms of this line of credit, the Company is required to meet certain covenants, including maintenance of minimum levels of tangible net worth, current ratio, and profitability as well as a maximum level of debt to tangible net worth.

NOTE 5 - ACCRUED EXPENSES

Accrued expenses consist of the following at December 31, 2009 and 2008:

	2009		2008

Payroll	$	11,786	$	—
Commissions		46,046		—
Other		791		709

	$	58,623	$	709

NOTE 6 - COMMITMENTS AND CONTINGENCIES

Leases - The Company conducts its operations in buildings leased under noncancelable lease agreements that expire at various dates from March 2012 to March 2015 and provides for monthly rents starting at $1,500 to $14,852.

Total rent expense for the above-mentioned leases for years ended December 31, 2009 and 2008 was $257,639 and $197,719, respectively.

Future minimum payments under these leases were as follows:

Years ending December 31:
2010	$	338,505
2011		354,321
2012		339,177
2013		257,403
2014		20,100
Thereafter		5,100

	$	1,314,606

Operating Sublease - The Company subleases part of its corporate offices to a related party. The agreement provides for monthly rent of $2,000 and expires March 2012. Rental income received from the related party under this noncancelable lease is recorded in general and administration expenses as an offset to total rent expense. Total rental income for the years ended December 31, 2009 and 2008 was $24,000 and $20,000, respectively.

Future minimum rental income under the operating sublease was as follows:

Years ending December 31:
2010	$	24,000
2011		24,000
2012		6,000

	$	54,000

NOTE 7 - LITIGATION

The Company in its ordinary course of business is subject to certain outside claims and potential litigation. The Company is not involved in any non-workers compensation claims or litigation. In the opinion of the Company management and its counsel, there are no matters which could have a material effect on the accompanying financial statements.

NOTE 8 - PRIOR PERIOD ADJUSTMENT AND RESTATEMENT

The financial statements for the year ended December 31, 2008 and the balance in retained earnings at December 31, 2008 have been restated from amounts previously reported to reflect the retrospective application of GAAP depreciation methods and a correction of an error in the computation of accounts receivable.

The effect of the above restatements is as follows:

For the Year Ended December 31, 2008	As Previously Reported		As Restated

Accounts receivable	$	1,223,716	$	1,376,243

Property and equipment - net	$	450,397	$	1,094,799

Retained earnings	$	4,165,097	$	4,962,026

Net sales	$	16,157,167	$	16,309,694

Net income	$	501,750	$	800,785

NOTE 9 - SUBSEQUENT EVENTS

Subsequent to December 31, 2009, the owners have signed a letter of intent to sell the Company to a third party. This transaction is expected to be completed by the end of the year.

Effective September 30, 2010, the Company has entered into a forty-eight month term loan in the amount of $500,000 and is personally guaranteed by one of the stockholders. Interest is payable monthly at the rate of prime plus 1.00%. In addition to interest payments, principal payments in the amount of $10,417 are payable monthly beginning November 2, 2010 with final payment October 2, 2014.

EX-99.2 4 v212033_ex99-2.htm Unassociated Document

Exhibit 99.2

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

UNAUDITED INTERIM FINANCIAL STATEMENTS

Nine-Month Periods Ended September 30, 2010 and 2009

Table of Contents

	Page

Balance Sheets - September 30, 2010 and December 31, 2009	2

Statements of Income - Nine-Month Periods Ended September 30, 2010 and 2009	3

Statements of Stockholders’ Equity - Nine-Month Periods Ended September 30, 2010 and 2009	4

Statements of Cash Flows - Nine-Month Periods Ended September 30, 2010 and 2009	5

Notes to Financial Statements - September 30, 2010 and 2009	6

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

BALANCE SHEETS

September 30, 2010 and December 31, 2009

	September 30,			December 31,
	2010			2009
ASSETS	(Unaudited)
Current assets:
Cash	$	283,655		$	57,628
Accounts receivable (less allowance for doubtful
accounts of $25,000 in both periods)		1,102,104			1,956,836
Inventory (Note 2)		3,040,881			1,051,716
Other current assets		55,000			--
Total current assets		4,481,640			3,066,180

Property and equipment (Note 3)		3,029,353			2,976,814
Accumulated depreciation		(1,853,243	)		(1,623,312	)
Net property and equipment		1,176,110			1,353,502
Other assets:
Deposits		15,337			15,337
Due from officer (Note 4)		4,847,898			2,669,893
Total other assets		4,863,235			2,685,230

	$	10,520,985		$	7,104,912

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit (Note 5)	$	1,000,000		$	900,000
Accounts payable		555,499			751,414
Accrued expenses (Note 6)		83,776			58,623
Total liabilities		1,639,275			1,710,037

Commitments, related party and contingencies (Note 7)
Stockholders’ equity:
Common stock, no par value: 7,500 shares
authorized, 1,000 shares issued and outstanding		24,604			24,604
Retained earnings		8,857,106			5,370,271
Total stockholders’ equity		8,881,710			5,394,875

	$	10,520,985		$	7,104,912

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

UNAUDITED STATEMENTS OF INCOME

Nine-Month Periods Ended September 30, 2010 and 2009

	Nine Months					Nine Months
	Ended			Percent		Ended			Percent
	September, 30			of		September, 30			of
	2010			Net Sales		2009			Net Sales

Net sales	$	14,859,772			100.0%	$	8,814,674			100.0%

Cost of goods sold		7,635,342			51.4		4,024,488			45.7

Gross profit		7,224,430			48.6		4,790,186			54.3

Operating expenses:
Selling and shipping		565,385			3.8		334,929			3.8
Officer salaries		534,154			3.6		156,000			1.8
General and administration		2,675,551			18.0		1,834,961			20.8
Total operating expenses		3,775,090			25.4		2,325,890			26.4

Operating income		3,449,340			23.2		2,464,296			28.0

Other income (expense):
Other income		78,944			0.5		(41,015	)		(0.5)
Interest income		30			--		1,438			--
Interest (expense)		(31,139	)		(0.2)		(16,836	)		(0.2)
Total other income		47,835			0.3		(56,413	)		(0.6)

Income before income taxes		3,497,175			23.5		2,407,883			27.3

Provision for income taxes		10,340			0.1		10,200			0.1

Net income	$	3,486,835			23.4%	$	2,397,683			27.2%


See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

UNAUDITED STATEMENTS OF STOCKHOLDERS' EQUITY

Nine-Month Periods Ended September 30, 2010 and 2009

	Shares						Total
	Issued and		Common		Retained		Stockholders'
	Outstanding		Stock		Earnings		Equity

Balance at December 31, 2008		1,000	$	24,604	$	4,962,026	$	4,986,630

Net income for nine months ended
September 30, 2009		--		--		2,397,683		2,397,683

Balance at September 30, 2009		1,000	$	24,604	$	7,359,709	$	7,384,313



Balance at December 31, 2009		1,000	$	24,604	$	5,370,271	$	5,394,875

Net income for nine months ended
September 30, 2010		--		--		3,486,835		3,486,835

Balance at September 30, 2010		1,000	$	24,604	$	8,857,106	$	8,881,710


See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

UNAUDITED STATEMENTS OF CASH FLOWS

Nine-Month Periods Ended September 30, 2010 and 2009

	Nine months ended September 30,
	2010			2009
Cash flows from operating activities:
Net income	$	3,486,835		$	2,397,683

Adjustments to reconcile net income to net
cash provided by operating activities :
Depreciation		311,068			297,401
Change in current assets and liabilities:
Accounts receivable, net		854,732			(945,437	)
Inventory		(1,989,165	)		43,073
Other current assets		(55,000	)		13,815
Accounts payable		(195,915	)		(81,084	)
Accrued expenses		25,153			49,220
Net cash provided by operating activities		2,437,708			1,774,671

Cash flows from investing activities:
Acquisition of property and equipment		(147,182	)		(630,596	)
Advances to officer		(2,164,499	)		(2,935,138	)
Net cash used in investing activities		(2,311,681	)		(3,565,734	)

Cash flows from financing activities:
Net activity in revolving line of credit		100,000			900,000
Net cash provided by financing activities		100,000			900,000

Net increase (decrease) in cash		226,027			(891,063	)
Cash at beginning of period		57,628			935,209

Cash at end of period	$	283,655		$	44,146

Cash payments for:
Interest	$	31,139		$	16,836
Income taxes		10,340			--
Non-cash investing activity:
Fixed assets disposed of in "due from officer" account	$	13,506		$	--

See accompanying notes to financial statements.

SOUTHERN CALIFORNIA BRAIDING CO., INC.

(An "S" Corporation)

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

September 30, 2010 and 2009

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Concentrations of Credit Risk - The Company sells its products to customers throughout the United States. At September 30, 2010, one customer accounted for 23% of accounts receivable and 70% of net sales. At September 30, 2009, eight customers accounted for 66% of accounts receivable and 73% of year-to-date net sales. The Company performs ongoing credit evaluations on its customers and generally does not require collateral. Management does not expect any major business relationships to be lost or disrupted in the near future.

The Company maintains bank accounts with a major banking institution in which the deposits are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At September 30, 2010, the Company maintained balances in excess of FDIC insurance limits.

Inventory - Inventory is stated at the lower of cost (first-in, first-out) or market value. Market value is considered as replacement cost. Inventory consists of finished goods, work in process, and components. Inventory cost includes expenses that are directly or indirectly incurred in the acquisition and production of merchandise and manufactured products for sales. Expenses include the cost of materials and supplies used in production, direct labor costs and allocated overhead costs.

Furniture and fixtures	7 years
Computers and equipment	5 to 7 years
Automobiles	5 years

Leasehold improvements are amortized over the life of the lease or the estimated useful life of the asset, whichever is shorter.

Revenue Recognition - Revenues from the sale of products are recognized upon shipment of products to customers and title passes. Right of return is granted on products shipped when products received are damaged or not in compliance with the customer orders.

Fair Value of Financial Instruments - For certain Company financial instruments, including cash, accounts receivable, due from related parties, prepaid expenses and other current assets, accounts payable, and accrued liabilities, the carrying amounts approximate fair value due to their short maturities. The amounts shown for note payable to bank also approximate fair value because current interest rates offered to the Company for debt of similar maturities are substantially the same.

Advertising and Promotional Expenses - Advertising and promotional expenses are charged to expense as incurred. There were no advertising expenses for the nine-month periods ended September 30, 2010 or 2009.

Income Taxes - The Company has elected “S” Corporation status for Federal and state income tax purposes. Under this provision, the Company does not pay Federal income taxes, and operating income and losses are passed through to the stockholders. State income taxes are provided for based upon earnings reported for financial statement purposes at the greater of the “S” Corporation rate of 1.5% or $800.

Subsequent Events -The Company evaluated subsequent events through December 15, 2010, the date these financial statements were issued. With the exception of those matters discussed in Note 9, there were no material subsequent events that required recognition or additional disclosure in these financial statements.

NOTE 2 - INVENTORY

Inventory consisted of the following at September 30, 2010 and December 31, 2009:

	September 30,		December 31,
Inventory	2010		2009

Components	$	2,029,126	$	1,051,716
Work in process		442,450		--
Finished goods		569,305		--
	$	3,040,881	$	1,051,716

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at September 30, 2010 and December 31, 2009:

	September 30,			December 31,
Property & Equipment	2010			2009

Computers and equipment	$	1,028,569		$	1,060,467
Furniture and fixtures		356,536			343,242
Leasehold improvements		1,644,248			1,573,105
		3,029,353			2,976,814
Accumulated depreciation & amortization		(1,853,243	)		(1,623,312	)
	$	1,176,110		$	1,353,502

Depreciation and amortization expense for the nine-month periods ended September 30, 2010 and 2009 totaled $311,068 and $297,401, respectively.

NOTE 4 - TRANSACTIONS WITH RELATED PARTIES

Due from Officer - At times throughout the year, the Company advances money to the majority stockholder. These amounts are considered “due on demand” and do not accrue interest. At September 30, 2010 and December 31, 2009, the Company had amounts due from the majority stockholder of $4,847,898 and $2,669,893, respectively.

NOTE 5 - LINE OF CREDIT

The Company maintains a revolving line of credit with a bank to assure credit availability. The Company’s line of credit permits indebtedness of up to $3,000,000 and matures on June 2, 2011. Borrowings are secured by substantially all assets of the Company and are personally guaranteed by one of the stockholders. Interest is payable monthly, at the bank’s prime lending rate, (prime rate at September 30, 2010 was 3.25%) plus 0.75%. The outstanding balances on the line of credit at September 30, 2010 and December 31, 2009 were $1,000,000 and $900,000, respectively.

NOTE 6 - ACCRUED EXPENSES

Accrued expenses consisted of the following at September 30, 2010 and December 31, 2009:

	September 30,		December 31,
Accrued Expenses	2010		2009

Payroll	$	75,725	$	11,786
Commissions		--		46,046
Other		8,051		791
	$	83,776	$	58,623

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Leases - The Company conducts its operations in buildings leased under noncancelable lease agreements that expire at various dates from March 2012 to March 2015 and provide for monthly rents starting at $1,500 to $14,852. Rent expense for the mentioned leases for the nine-month periods ended September 30, 2010 and 2009 totaled $255,956 and $191,378, respectively.

Future minimum payments under these leases were as follows:

	September 30,
Minimum Lease Payments	2010

Three months ending December 31, 2010	$	110,163
Years ending December 31:
2011		354,321
2012		339,177
2013		257,403
2014		20,100
Thereafter		5,100
	$	1,086,264

Future minimum rental income under the operating sublease was as follows:

	September 30,
Minimum Sublease Income	2010

Three months ending December 31, 2010	$	6,000
Years ending December 31:
2011		24,000
2012		6,000
	$	36,000

NOTE 8 - LITIGATION

NOTE 9 - SUBSEQUENT EVENTS

Subsequent to September 30, 2010, the owners have signed a letter of intent to sell the Company to a third party. The transaction is expected to be completed by the end of the year.

The Company has entered into a forty-eight month term loan in the amount of $500,000 and is personally guaranteed by one of the stockholders. The loan was not funded until October 2010. Interest is payable monthly at the rate of prime plus 1.00%. In addition to interest payments, principal payments in the amount of $10,417 are payable monthly beginning November 2, 2010 with final payment October 2, 2014.

EX-99.3 5 v212033_ex99-3.htm Unassociated Document

Exhibit 99.3

IEC ELECTRONICS CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

Year Ended September 30, 2010 and Three Months Ended December 31, 2010

The following unaudited pro forma consolidated income statements have been prepared to give effect to IEC Electronics Corp.’s (“IEC”) acquisition of substantially all of the assets of Southern California Braiding Co., Inc. ("SCB") on December 17, 2010, using the acquisition method of accounting. The pro forma income statements were prepared as if the acquisition had been completed on October 1, 2009, and key assumptions and adjustments are described in the notes that follow the income statements.

IEC’s fiscal year ends on September 30th of each year, whereas prior to the acquisition, SCB's fiscal years ended on December 31st. In order to construct a pro forma combined income statement for the year ended September 30, 2010, IEC's statement for that period was combined with SCB's income statements for the last three months of its 2009 fiscal year and the first nine months of its 2010 fiscal year. The pro forma combined income statement for the three months ended December 31, 2010 was prepared by adding IEC's consolidated income statement for the first quarter of its 2011 fiscal year to SCB's income statement for the period from October 1, 2010 to the day prior to the company's December 17, 2010 acquisition by IEC.

In combining SCB's income statements with IEC's, certain adjustments are made to incorporate the estimated effects of the acquisition on SCB's operations. Such adjustments, relating primarily to operating expenses, include those that are directly attributable to the transaction and are expected to have a continuing impact on operating results. Revenue accounts have not been adjusted for the effects of additional sales opportunities that are expected to result from offering an expanded array of products and services to customers of IEC and SCB.

Persons utilizing these unaudited pro forma statements are cautioned regarding the imprecise and speculative nature of the pro forma adjustments. The adjustments reflect management's preliminary estimates of the effects of the acquisition on SCB that may be rendered obsolete or misstated as new information is acquired regarding the SCB business and as future operating decisions are made. The pro forma income statements are also dependent upon preliminary estimates of purchase price and upon the allocation of price among the assets and liabilities acquired. Purchase price and the allocation have a significant effect on certain estimated expenses included in the pro forma statements, particularly depreciation and amortization. Purchase price and the allocation may change by material amounts based on procedures that are incomplete as of the date of this Current Report, including the verification of acquisition-date working capital and the appraisal and valuation by independent experts of the acquired assets. In addition, the purchase agreement provides that price would be reduced if sales and backlog do not reach contractual targets during calendar year 2011.

The unaudited pro forma consolidated income statements should be read in conjunction with: (i) IEC’s previously filed Quarterly Report on Form 10-Q for the quarter ended December 31, 2010; (ii) IEC’s previously filed Annual Report on Form 10-K for the year ended September 30, 2010; (iii) SCB’s audited financial statements for the years ended December 31, 2009 and 2008, included herein as exhibit 99.1; (iv) SCB's unaudited financial statements for the nine months ended September 30, 2010 and 2009, included herein as exhibit 99.2; and (v) the notes that follow the unaudited pro forma consolidated income statements.

The operating results presented in the unaudited pro forma consolidated income statements are not necessarily equivalent to those that would have been obtained by consummating the SCB acquisition on October 1, 2009, nor are they necessarily indicative of future results which may vary significantly from the estimates providing the basis for these pro forma statements.

IEC ELECTRONICS CORP. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

Year Ended September 30, 2010 and Three Months Ended December 31, 2010

(in thousands, except share and per share data)

	Year ended September 30, 2010
	IEC and						Pro forma				Pro forma
	subsidiaries			SCB(1)			adjustments(2)				combined

Net sales	$	96,674		$	17,945		$				$	114,619
Cost of sales		80,411			10,949			410		a		91,770
Gross profit		16,263			6,996			(410	)			22,849
Selling and administrative expenses		8,576			7,081			(4,246	)	b		11,411
Operating profit (loss)		7,687			(85	)		3,836				11,438

Interest and financing expense		814			24			978		c		1,816
Other (income)/expense		(182	)		(59	)		259		d		18
Income (loss) before provision for income taxes		7,055			(50	)		2,599				9,604

Provision for income taxes		2,400						1,020		e		3,420
Net income (loss)	$	4,655		$	(50	)	$	1,579			$	6,184

Net income per common and common equivalent share:
Basic	$	0.52									$	0.68
Diluted		0.48										0.64

Weighted average number of common and common equivalent shares outstanding:
Basic		8,990,180						100,000		f		9,090,180
Diluted		9,608,174						100,000		f		9,708,174

(1) Includes Q4 2009 plus nine months of calendar 2010.

(2) See Note 3

	Three Months Ended December 31, 2010
	IEC and		10/1-12/16/10			Pro forma				Pro forma
	subsidiaries		SCB			adjustments(2)				combined

Net sales	$	28,644	$	3,931		$				$	32,575
Cost of sales		24,061		2,361			83		aa		26,505
Gross profit		4,583		1,570			(83	)			6,070
Selling and administrative expenses		2,620		1,870			(1,040	)	bb		3,450
Operating profit (loss)		1,963		(300	)		957				2,620

Interest and financing expense		244		6			204		cc		454
Other (income)/expense		13		(68	)		(109	)	dd		(164	)
Income (loss) before provision for income taxes		1,706		(238	)		862				2,330

Provision for income taxes		657					250		ee		907
Net income (loss)	$	1,049	$	(238	)	$	612			$	1,423

Net income per common and common equivalent share:
Basic	$	0.11								$	0.15
Diluted		0.11									0.14

Weighted average number of common and common equivalent shares outstanding:
Basic		9,224,877					83,696		ff		9,308,573
Diluted		9,766,022					83,696		ff		9,849,718

(2) See Note 3

The accompanying notes are an integral part of this pro forma financial information.

IEC ELECTRONICS CORP AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

Year Ended September 30, 2010 and Three Months Ended December 31, 2010

The unaudited pro forma consolidated income statements included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, management believes that the disclosures are adequate to make the information presented not misleading.

1. THE ACQUISITION AND BASIS OF PRO FORMA PRESENTATION

On December 17, 2010, a wholly owned subsidiary of IEC Electronics Corp. (“IEC” or "Company") acquired substantially all of the assets of Southern California Braiding Co., Inc. ("SCB") of Bell Gardens, CA, a privately held manufacturer of high reliability wire, cable and harness products for military and defense applications. The preliminary purchase price of $25.0 million plus a closing-date preliminary working capital adjustment of $1.6 million were funded with $26.0 million of senior bank debt and 100,000 shares of IEC common stock valued at $609 thousand.

The unaudited pro forma consolidated income statements for the year ended September 30, 2010 and for the three months ended December 31, 2010 give effect to the SCB acquisition as if it had occurred on October 1, 2009.

IEC’s fiscal year ends on September 30th of each year, whereas prior to the acquisition, SCB's fiscal year ended on December 31st. In order to construct a pro forma combined income statement for the year ended September 30, 2010, IEC's income statement for that period was combined with SCB's income statements for the last three months of its 2009 fiscal year and the first nine months of its 2010 fiscal year. The pro forma combined income statement for the three months ended December 31, 2010 was prepared by adding IEC's consolidated income statement for the first quarter of its 2011 fiscal year to SCB's income statement for the period from October 1, 2010 to the day prior to the company's December 17, 2010 acquisition by IEC.

2. PURCHASE PRICE ALLOCATION

Under the acquisition method of accounting, the Company is required to measure and record the fair value of assets acquired and liabilities assumed. If the purchase price is greater than the value of identifiable net assets acquired, as in the case of SCB, the difference is recorded as goodwill. If net asset value exceeds the amount paid, the excess is recorded in other income as a gain.

The pro forma income statements are based on management's preliminary estimates of purchase price and the allocation of price among the assets and liabilities acquired. Purchase price and the allocation have a significant effect on certain estimated expenses included in the pro forma statements, particularly depreciation and amortization. Purchase price and the allocation may change by material amounts based on procedures that are incomplete as of the date of this Current Report, including the verification of acquisition-date working capital and the appraisal and valuation by independent experts of the acquired assets. In addition, the purchase agreement provides that price would be reduced if sales and backlog do not reach contractual targets during calendar year 2011.

At the time this Current Report is being filed, IEC has received preliminary estimates of fixed and intangible asset values from an appraisal firm, and the purchase price allocation has been adjusted accordingly from the allocation presented in the Company's previously filed Form 10-Q for the quarter ended December 31, 2010. Valuations assigned to product molds and customer intangibles were increased significantly from amounts reflected in Form 10-Q, with an offsetting decrease in the goodwill asset.

Preliminary fair values for the assets acquired and liabilities assumed in the SCB acquisition are summarized as follows:

SCB Opening Balance Sheet	Updated for		Per 12/31/10
As of December 17, 2010	this Form 8-K/A		Form 10-Q
	(thousands, except shares)

Accounts receivable, net	$	1,620	$	1,620
Inventories		2,790		2,790
Leasehold improvements		1,169		814
Machinery & equipment		3,177		510
Furniture & fixtures		236		176
Intangible assets		5,156		100
Goodwill		12,950		21,088
Deferred income taxes		106		106
Total assets acquired		27,204		27,204

Accounts payable	$	503	$	503
Accruals and other liabilities		62		62
Total liabilities assumed		565		565
Net assets acquired/purchase price	$	26,639	$	26,639

Funded with bank debt	$	26,030	$	26,030
Funded with 100,000 shares of IEC common stock		609		609
Total funding for SCB acquisition	$	26,639	$	26,639

(See Note 3 on next page.)

3. PRO FORMA ADJUSTMENTS

In preparing the unaudited pro forma consolidated income statements for the year ended September 30, 2010 and the three months ended December 31, 2010, the following adjustments were made:

Description of pro forma adjustments	Year				Three months
(in thousands, except shares)	ended				ended
	9/30/10				12/31/10
Cost of sales
Depreciation change relating to production-related fixed asset revaluation	$	410		a		83		aa

Selling and administrative expenses
Compensation adjustments for senior and other staff	$	(2,135	)			(458	)
Change in sales commission program		(167	)			(49	)
Other sales and marketing cost reductions		(710	)			(227	)
Insurance premium reductions		(307	)			(62	)
Office supplies expense reductions		(146	)			(29	)
Legal and accounting expense reductions		(613	)			(154	)
Elimination of executive life insurance policy		(27	)			(5	)
Reduction in charitable contributions		(131	)			(34	)
Lower utilization of contract employment arrangements		(271	)			(82	)
Depreciation change relating to non-production fixed asset revaluation		(96	)			(15	)
Amortization of intangible assets		357				75
Total selling and administrative expense adjustments	$	(4,246	)	b		(1,040	)	bb

Interest and financing expense
Elimination of interest on seller's debt	$	(24	)			(6	)
Interest on $20.0 million SCB term loan at 3.81%		762				160
Interest on $6.0 million of SCB-related Revolver borrowings at 3.56%		215				45
Amortization of commitment fee on SCB-related borrowing		25				5
Total interest and financing expense adjustments	$	978		c		204		cc

Other (income)/expense
IEC's pre-merger SCB-related legal, accounting and travel expenses	$	109				(109	)
Costs of integrating SCB's information systems with IEC's		150				-
Total other (income)/expense adjustments	$	259		d		(109	)	dd

Provision for income taxes
Income taxes on SCB earnings and adjustments at estimated rate of 40%	$	1,020		e		250		ee

Weighted average common shares outstanding
Shares of IEC common stock issued to acquire SCB		100,000		f		-
Addition to wgtd. avg. shares to account for 100,000 from 10/1 to 12/16/10						83,696		ff