-----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, VM8LYwRwRuEHydNs3wLwkMNpuGNpY6nDHb5uvM04I/sGZ6/UZmOUmkhF34dnrpXj MxMYBje8RU+pbhrzNnS0IA== 0000927016-96-000113.txt : 19960409 0000927016-96-000113.hdr.sgml : 19960409 ACCESSION NUMBER: 0000927016-96-000113 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960408 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL ELECTRONICS INC CENTRAL INDEX KEY: 0000717751 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 042654231 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16305 FILM NUMBER: 96545138 BUSINESS ADDRESS: STREET 1: 427 TURNPIKE ST CITY: CANTON STATE: MA ZIP: 02072 BUSINESS PHONE: 6178215566 MAIL ADDRESS: STREET 1: 427 TURNPIKE STREET CITY: STOUGHTON STATE: MA ZIP: 02072 10QSB 1 FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For Quarter Ended February 29, 1996 -------------------------------------------------------------- Commission File Number 2-91218-B --------------------------------------------------------- International Electronics, Inc. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Massachusetts 04-2654231 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 427 Turnpike Street, Canton, Massachusetts 02021 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (617) 821-5566 - -------------------------------------------------------------------------------- (Issuer's telephone number, including area code) Not applicable - -------------------------------------------------------------------------------- (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 preceding 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 ------ ______ 1,475,851 common shares were outstanding at April 2, 1996. INTERNATIONAL ELECTRONICS, INC. --------------------------------- Index -----
Part I. Financial Statements (unaudited) -------------------------------- Condensed Consolidated Balance Sheets, February 29, 1996 and August 31, 1995 2 Condensed Consolidated Statements of Operations, three and six months ended February 29, 1996 and February 28, 1995 3 Condensed Consolidated Statement of Shareholders' Equity, six months ended February 29, 1996 4 Condensed Consolidated Statements of Cash Flows, six months ended February 29, 1996 and February 28, 1995 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2: Management's Discussion and Analysis of --------------------------------------- Financial Condition and Results of Operations 9-11 --------------------------------------------- Part II. Other Information: Item 4: Submission of Matters to a Vote of 12 ---------------------------------- Security Holders ---------------- Item 6: Exhibits and Reports on Form 8-K 12 -------------------------------- Signatures 12 ----------
-1- INTERNATIONAL ELECTRONICS, INC. --------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS ---------------------------------------- (unaudited)
Feb. 29, 1996 August 31, 1995 ------------- --------------- ASSETS - ------ Current assets: Cash and equivalents $ 528,629 $ 327,812 Accounts receivable, net 942,159 836,705 Inventories 705,352 623,913 Other current assets 86,427 104,451 ----------- ----------- Total current assets 2,262,567 1,892,881 Equipment, furniture and improvements, net 291,675 280,326 Other assets: Goodwill and other intangibles, net 370,455 415,597 Other 15,027 17,285 ----------- ----------- 385,482 432,882 ----------- ----------- $ 2,939,724 $ 2,606,089 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 674,679 $ 651,176 Accrued expenses 547,716 431,389 Income taxes 21,000 - Current portion of long-term obligations 99,107 69,095 ----------- ----------- Total current liabilities 1,342,502 1,151,660 Long-term obligations 425,872 452,685 Commitments Shareholders' equity: Common stock, $.01 par value: Authorized 5,984,375 shares Issued 1,510,851 and 1,442,669 shares 15,109 14,427 Capital in excess of par value 4,756,425 4,668,050 Accumulated deficit (3,561,540) (3,642,089) Less treasury stock, at cost: 35,000 shares (38,644) (38,644) ----------- ----------- Total shareholders' equity 1,171,350 1,001,744 ----------- ----------- $ 2,939,724 $ 2,606,089 =========== ===========
See notes to unaudited condensed consolidated financial statements. -2- INTERNATIONAL ELECTRONICS, INC. --------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS --------------------------------------------------- (unaudited)
Three months ended Six months ended ------------------------------- -------------------------------- Feb. 29, 1996 Feb. 28, 1995 Feb. 29, 1996 Feb. 28, 1995 -------------- -------------- -------------- -------------- Net sales $2,045,554 $1,530,526 $3,990,877 $3,125,807 Cost of sales 1,192,180 870,792 2,325,552 1,800,266 ---------- ---------- ---------- ---------- Gross profit 853,374 659,734 1,665,325 1,325,541 Research and development costs 87,694 82,175 160,459 153,894 Selling, general and administrative expenses 693,556 668,863 1,388,395 1,261,705 ---------- ---------- ---------- ---------- Income (loss) from operations 72,124 (91,304) 116,471 (90,058) Interest expense (13,062) (14,781) (27,088) (28,591) Other income 7,218 4,448 12,166 29,969 ---------- ---------- ---------- ---------- Income (loss) before taxes 66,280 (101,637) 101,549 (88,680) Provision for taxes 16,000 1,000 21,000 2,000 ---------- ---------- ---------- ---------- Net income (loss) $ 50,280 ($102,637) $ 80,549 ($90,680) ========== ========== ========== ========== Net income (loss) per common share $.03 ($.07) $.05 ($.06) ========== ========== ========== ========== Weighted average number of common shares outstanding 1,564,751 1,417,058 1,543,506 1,420,382 ========== ========== ========== ==========
See notes to unaudited condensed consolidated financial statements. -3- INTERNATIONAL ELECTRONICS, INC. --------------------------------- CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY ------------------------------------------------------------- (unaudited)
Common Stock Capital in Treasury Stock ------------- excess of Accumulated ----------------- Shares Amount par value Deficit Shares Cost Total ------ ------ -------- ------- ------ ---- ----- Balances, September 1, 1995 1,442,669 $14,427 $4,668,050 ($3,642,089) 35,000 ($38,644) $1,001,744 Issuance of stock in a private placement 68,182 682 88,375 - - - 89,057 Net income - - - 80,549 - - 80,549 Balances, --------- -------- ---------- ----------- ----------- --------- ---------- February 29, 1996 1,510,851 $15,109 $4,756,425 ($3,561,540) 35,000 ($38,644) $1,171,350 ========= ======= ========== =========== =========== ========= ==========
See notes to unaudited condensed consolidated financial statements. -4- INTERNATIONAL ELECTRONICS, INC. ------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (unaudited)
Six months ended --------------------------------- Feb. 29, 1996 Feb. 28, 1995 ----------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 80,549 ($90,680) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 116,351 136,570 Changes in operating assets and liabilities: Accounts receivable (105,454) (31,168) Inventories (81,439) (157,579) Other current assets 18,024 1,577 Income taxes 21,000 2,000 Accounts payable and accrued expenses 139,830 237,772 --------- --------- Net cash provided by operating activities 188,861 98,492 CASH FLOWS FROM INVESTING ACTIVITIES AND OTHER: Net purchase of equipment, furniture and improvements (70,342) (27,648) Goodwill and other intangibles and other assets 2,258 (4,781) --------- --------- Net cash used in investing activities and other (68,084) (32,429) CASH FLOWS FROM FINANCING ACTIVITIES: Additions of notes payable and debt obligations 29,167 - Issuance of common stock 89,057 - Purchase of treasury stock - (19,042) Reduction of notes payable and debt obligations (38,184) (91,955) --------- --------- Net cash provided by (used in) financing activities 80,040 (110,997) --------- --------- CASH AND EQUIVALENTS: Net increase (decrease) during period 200,817 (44,934) Balances, beginning of period 327,812 498,663 --------- --------- Balances, end of period $ 528,629 $ 453,729 ========= ========= SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS: Equipment acquired under capitalized leases $ 12,217 $ 37,258
See notes to unaudited condensed consolidated financial statements. -5- INTERNATIONAL ELECTRONICS, INC. --------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS --------------------------------------------------------- (unaudited) A. Financial Statements: --------------------- In the opinion of the Company, the unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of February 29, 1996 and the results of operations for the three and six months then ended. Certain disclosures normally included have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company believes the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-KSB for the year ended August 31, 1995. B. Net Income (Loss) per Share: ---------------------------- Net income (loss) per share is based on the weighted average common and dilutive common equivalent shares outstanding during the periods. Common stock equivalents consist of stock options and warrants. Primary income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common and common equivalent shares outstanding based on the average market price of the Company's common stock (under the treasury stock method). Income (loss) per common share, on a fully diluted basis, is computed as described above utilizing the higher of the ending or average market price of the Company's common stock. Primary and fully diluted earnings per share are the same for each period. C. Principles of Consolidation: ---------------------------- The accompanying condensed consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Ecco Industries, Inc. All material intercompany transactions, balances and profits have been eliminated. D. Income Taxes: ------------- The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. Cumulative adjustments to the tax provision are recorded in the interim period in which a change in the estimated annual effective rate is determined. -6- INTERNATIONAL ELECTRONICS, INC. ------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- (continued) (unaudited) E. Long-term Obligations: ---------------------- Long-term obligations are summarized as follows:
Feb. 29, 1996 Aug. 31, 1995 -------------- -------------- Federal Deposit Insurance Corporation Agreement $395,642 $406,192 11-18% capitalized lease obligations, due through December 1998 (Note F) 69,909 80,740 Other 43,167 14,000 9-13% equipment loans, collateralized by equipment, final payment due July, 1998 16,261 20,848 -------- -------- 524,979 521,780 Less current portion (99,107) (69,095) -------- -------- $425,872 $452,685 ======== ========
Federal Deposit Insurance Corporation (FDIC) Agreement - In May 1991, the ------------------------------------------------------ Company's bank, Boston Trade Bank, was declared insolvent and the FDIC became the holder of the Company's debt to the bank. In December 1994, the Company renegotiated this debt with the FDIC. The agreement provided for repayment of $35,000 prior to October 8, 1994, with payments on the remaining balance of $430,000 utilizing a 20-year amortization with payment in full after 3 years. The debt is collateralized by all of the Company's assets with interest at the prime rate plus 1% and has been personally guaranteed by an officer of the Company. The aggregate principal payments on long-term obligations, excluding capital leases are $58,140 (1997), $394,303 (1998) and $2,627 (1999). -7- INTERNATIONAL ELECTRONICS, INC. ------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- (continued) (unaudited) F. Capital Lease Commitments: -------------------------- The Company leases certain equipment under capital leases and, accordingly, the present value of the net minimum payments has been reflected in equipment, furniture and improvements and capitalized lease obligations. Future minimum capital lease payments under lease terms in excess of one year at February 29, 1996 are as follows: 1997 $ 48,903 1998 27,142 1999 3,827 -------- Total minimum lease payments 79,872 Less interest (9,963) -------- Net minimum lease payments 69,909 Less current portion (40,967) -------- Long-term portion $ 28,942 ========
G. Capital Transactions: --------------------- In September, 1995, the Company approved and reserved 70,000 shares of common stock for an additional non-qualified stock option plan. In January, 1996, the Company sold in a private placement, 68,182 shares of restricted common stock for net proceeds of $89,057 with issuance costs of $943. In January, 1996, the Company granted warrants to a consulting firm to purchase 10,000 shares of common stock at an exercise price of $1.65 per share exercisable until 2006. -8- Management's Discussion and Analysis of ------------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- As of February 29, 1996, the Company had working capital of $920,065 compared to $741,221 at August 31, 1995. The ratio of current assets to current liabilities was 1.7 at February 29, 1996 as compared to 1.6 at August 31, 1995. The debt to equity ratio was 1.5 at February 29, 1996 and 1.6 at August 31, 1995. The increase in working capital and current ratio and decrease in the debt to equity ratio are the result of the Company's operating cash flow for the first six months of fiscal 1996 and a private placement of stock in January, 1996 for net proceeds of approximately $89,000. Capital expenditures were $82,559 and $64,906 for the six months ended February 29, 1996 and February 28, 1995, respectively. The Company has no current commitments for any material capital expenditures, but the Company anticipates up to $290,000 in capital expenditures for the purchase of office and manufacturing equipment, regulatory testing and tooling costs over the next twelve months. As of February 29, 1996, the Company had indebtedness of approximately $396,000 under an agreement with the Federal Deposit Insurance Corporation ("FDIC"). See Note E to Unaudited Condensed Consolidated Financial Statements. In May, 1991 the Commissioner of Banks of the Commonwealth of Massachusetts declared the Company's bank insolvent, and appointed the FDIC as liquidating agent of the bank. In December, 1994, the Company renegotiated this debt with the FDIC. The revised agreement provided for repayments of the then current balance utilizing a 20-year amortization with payment in full at December 31, 1997 and interest at the prime rate plus 1%. Management believes that its current cash position, together with internally generated funds at present sales levels, will provide adequate cash reserves to satisfy its cash requirements for the next twelve months. Depending upon whether or not sufficient revenue and working capital is generated from profitable operations, the Company may require external funding. There is no assurance that profits will be generated, or that external funding will be obtainable, if such a need should arise. Results of Operations - --------------------- Net sales for the second quarter of fiscal 1996 increased 34% as compared to the second quarter of fiscal 1995. Net sales for the first six months of fiscal 1996 increased 28% as compared to the comparable period of fiscal 1995. The increase in sales for the second quarter and first half of fiscal 1996 primarily reflects increases in access control and keypad and voice verification product sales, offset in part by a reduction in glassbreak detector sales. -9- Management's Discussion and Analysis ---------------------------------------- of Financial Condition and Results of Operations ------------------------------------------------- (continued) Results of Operations (continued) - --------------------- The ratio of gross profit to sales for the three months ended February 29, 1996 and February 28, 1995 was 42% and 43%, respectively. The ratio of gross profit to sales for the six months ended February 29, 1996 and February 28, 1995 were both 42%. The decrease in gross profit for the second quarter of 1996 as compared to the comparable period of fiscal 1995 is primarily the result of product mix. The increase in research and development costs for the second quarter and first half of fiscal 1996 as compared to the comparable periods of fiscal 1995 reflect the hiring of additional employees and related expenses. As a percentage of net sales, selling, general and administrative expenses were 34% and 44% for the three months ended February 29, 1996 and February 28, 1995, respectively and 35% and 40% for the six months ended February 29, 1996 and February 28, 1995, respectively. The increase in selling, general and administrative expenses in absolute dollars for the three and six months ended February 29, 1996, as compared to the corresponding periods of the prior year primarily relates to additions in the Company's work force and related expenses, salary increases and promotional expenses. The increase in other income for the three months ended February 29, 1996 as compared to the comparable period of fiscal 1995, primarily relates to an increase in commission revenue. The provision for taxes for the first half of fiscal 1996 represents federal alternative minimum taxes and state income tax expense. The Company's effective income tax rate for the six months ended February 29, 1996 of 21% was less than the combined federal and state statutory rate, primarily as a result of the utilization of available net operating loss carryforwards. Factors that May Affect Future Results - -------------------------------------- Information provided by the Company in writing and orally, from time to time may contain certain "forward-looking" information as this term is defined by: (1) the Private Securities Litigation Reform Act of 1995 (the "Act") and (2) in releases made by the Securities and Exchange Commission. These Cautionary Statements are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the "safe harbor" provisions of the Act. The Company cautions investors that any forward-looking statements made by the Company involve risks and uncertainties, which could cause actual results to differ materially from those projected. The Company has identified risks and uncertainties as factors which may impact on its operating results including the following: the Company's limited financial resources and history of operating losses, no access to additional financing, needs for developing, introducing, and shipping new products, lack of significant research and development expenditures to provide new and enhanced versions of the Company's products, its mix of products sold, price reductions for the Company's products, the mix of distribution channels employed, the availability and cost of key components including those obtained from Asia, -10- Management's Discussion and Analysis ---------------------------------------- of Financial Condition and Results of Operations ------------------------------------------------- (continued) Factors that May Affect Future Results (continued) - -------------------------------------- dependence on suppliers, concentration of customers, gain or loss of significant customers, the timing of orders from and shipments to customers, competition including those from substantially larger companies, lack of patent protection and general economic conditions. All of the above factors are difficult for the Company to forecast, and these or other factors can materially adversely affect the Company's business and operating results for one quarter or a series of quarters. The Company establishes its expenditure levels for sales and marketing and other operating expenses based, in large part, on its expected future results. As a result, if sales fall below expectations, there would likely be a material adverse effect on operating results because only a small portion of the Company's expenses vary with its sales in the short-term. A limited number of customers have accounted for a significant portion of sales in a particular quarter, and future sales therefore may fluctuate depending on the timing of orders from and shipments to those or other customers. In addition, the Company typically operates with a relatively small backlog. As a result, quarterly sales and operating results generally depend on the volume, timing of, and ability to fulfill orders received within the quarter which are difficult to forecast. In this regard, the Company may recognize a substantial portion of its sales in a given quarter from sales booked and shipped in the last weeks of that quarter. -11- EX-11.1 2 CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE EXHIBIT 11.1 International Electronics, Inc. Calculation of Net Income (Loss) Per Common Share
Three months ended Six months ended ----------------------------- ----------------------------- Feb. 29, 1996 Feb. 28, 1995 Feb. 29, 1996 Feb. 28, 1995 ------------- -------------- ------------- -------------- PRIMARY NET INCOME (LOSS) PER SHARE - ------------------------------------- Weighted Average Number of Shares Outstanding: Common Stock 1,433,892 1,417,058 1,420,780 1,420,382 Common equivalent shares resulting from dilutive stock options and warrants (treasury stock method using the average market price) 130,859 - 122,726 - ---------- ------------- ---------- ------------- Total 1,564,751 1,417,058 1,543,506 1,420,382 ========== ============= ========== ============= Net Income (Loss) $ 50,280 ($102,637) $ 80,549 ($90,680) ========== ============= ========== ============= Net Income (Loss) Per Common Share $ .03 ($.07) $ .05 ($.06) ========== ============= ========== ============= FULLY DILUTED NET INCOME (LOSS) PER SHARE - ----------------------------------------- Weighted Average Number of Shares Outstanding: Common Stock 1,433,892 1,417,058 1,420,780 1,420,382 Common equivalent shares resulting from dilutive stock options and warrants (treasury stock method using the higher of the ending or average market price) 258,338 - 260,143 - ---------- --------- ---------- --------- Total 1,692,230 1,417,058 1,680,923 1,420,382 ========== ========= ========== ========= Net Income (Loss) $ 50,280 ($102,637) $ 80,549 ($90,680) ========== ========= ========== ========= Net Income (Loss) Per Common Share $.03 ($.07) $.05 ($.06) ========== ========= ========== =========
EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT OF FINANCIAL CONDITION AT FEBRUARY 29, 1996 (UNAUDITED) AND THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS AUG-31-1996 SEP-01-1995 FEB-29-1996 528,629 0 0 0 705,352 2,262,567 0 0 2,939,724 1,342,502 425,872 0 0 15,109 1,156,241 2,939,724 3,990,877 4,003,043 2,325,552 2,325,552 160,459 0 27,088 101,549 21,000 80,549 0 0 0 80,549 .05 .05
-----END PRIVACY-ENHANCED MESSAGE-----