-----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, WZzheJSiVZELjTF7HpaOWMzwcm55ETZ/VGb7YGFShDpyzXdSKj6bddvS+xtpPHdx Tuvu5P0p4uMiE8m6Rpoo1w== 0000950109-97-002907.txt : 19970414 0000950109-97-002907.hdr.sgml : 19970414 ACCESSION NUMBER: 0000950109-97-002907 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970411 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: 97578473 BUSINESS ADDRESS: STREET 1: 427 TURNPIKE ST CITY: CANTON STATE: MA ZIP: 02072 BUSINESS PHONE: 6178215566 MAIL ADDRESS: STREET 1: 427 TURNPIKE STREET CITY: CANTON STATE: MA ZIP: 02021 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 28, 1997 ----------------- 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 ---- ---- 1,492,551 common shares were outstanding at April 2, 1997. INTERNATIONAL ELECTRONICS, INC. --------------------------------- Index ----- Part I. Financial Statements (unaudited) -------------------------------- Condensed Consolidated Balance Sheets, February 28, 1997 and August 31, 1996 2 Condensed Consolidated Statements of Operations, three and six months ended February 28, 1997 and February 29, 1996 3 Condensed Consolidated Statement of Shareholders' Equity, six months ended February 28, 1997 4 Condensed Consolidated Statements of Cash Flows, six months ended February 28, 1997 and February 29, 1996 5 Notes to Condensed Consolidated Financial Statements 6-8 Item 2: Management's Discussion and Analysis of --------------------------------------------- Financial Condition and Results of Operations 9-12 --------------------------------------------- Part II. Other Information: Item 4: Submission of Matters to a Vote of ---------------------------------- Security Holders 13 ---------------- Item 6: Exhibits and Reports on Form 8-K 13 -------------------------------- Signature 13 ---------
1 INTERNATIONAL ELECTRONICS, INC. --------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS ---------------------------------------- (unaudited)
Feb. 28, 1997 August 31, 1996 -------------- ---------------- ASSETS - ------ Current assets: Cash and equivalents $ 507,856 $ 556,745 Accounts receivable, net 922,947 932,255 Inventories 841,589 828,448 Other current assets 146,408 141,818 ----------- ----------- Total current assets 2,418,800 2,459,266 Equipment, furniture and improvements, net 354,287 301,300 Other assets: Goodwill and other intangibles, net 280,171 325,313 Other 42,156 14,299 ----------- ----------- 322,327 339,612 ----------- ----------- $ 3,095,414 $ 3,100,178 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 835,245 $ 592,137 Accrued expenses 905,573 703,133 Income taxes 23,000 40,000 Current portion of long-term obligations 40,516 79,516 ----------- ----------- Total current liabilities 1,804,334 1,414,786 Long-term obligations 54,207 409,451 Commitments Shareholders' equity: Common stock, $.01 par value: Authorized 5,984,375 shares Issued 1,527,551 and 1,527,051 shares 15,276 15,271 Capital in excess of par value 4,781,988 4,779,413 Accumulated deficit (3,521,747) (3,480,099) Less treasury stock, at cost: 35,000 shares (38,644) (38,644) ----------- ----------- Total shareholders' equity 1,236,873 1,275,941 ----------- ----------- $ 3,095,414 $ 3,100,178 =========== ===========
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. 28, 1997 Feb. 29, 1996 Feb 28, 1997 Feb. 29, 1996 -------------- -------------- ------------- -------------- Net sales $2,186,681 $2,045,554 $4,484,837 $3,990,877 Cost of sales 1,326,251 1,192,180 2,694,080 2,325,552 ---------- ---------- ---------- ---------- Gross profit 860,430 853,374 1,790,757 1,665,325 Research and development costs 136,763 87,694 250,881 160,459 Selling, general and administrative expenses 793,532 693,556 1,557,020 1,388,395 ---------- ---------- ---------- ---------- Income (loss) from operations (69,865) 72,124 (17,144) 116,471 Interest expense (12,020) (13,062) (24,066) (27,088) Other income 7,661 7,218 11,116 12,166 ---------- ---------- ---------- ---------- Income (loss) before extraordinary gain and taxes (74,224) 66,280 (30,094) 101,549 Extraordinary gain, net of income tax expense of $1,000 10,446 - 10,446 - ---------- ---------- ---------- ---------- Income (loss) before taxes (63,778) 66,280 (19,648) 101,549 Provision for taxes 6,000 16,000 22,000 21,000 ---------- ---------- ---------- ---------- Net income (loss) ($69,778) $ 50,280 ($41,648) $ 80,549 ========== ========== ========== ========== Net income (loss) per share: Income (loss) before extraordinary gain ($.06) $.03 ($.04) $.05 Extraordinary gain .01 - .01 - ---------- ---------- ---------- ---------- Net income ($.05) $.03 ($.03) $.05 ========== ========== ========== ========== Weighted average common and equivalent shares outstanding 1,492,551 1,564,751 1,492,510 1,543,506 ========== ========== ========== ==========
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, 1996 1,527,051 $15,271 $4,779,413 ($3,480,099) 35,000 ($38,644) $1,275,941 Stock issued upon exercise of employee stock options 500 5 675 - - - 680 Issuance of stock warrants - - 1,900 - - - 1,900 Net loss - - - (41,648) - - (41,648) --------- ------- ---------- ------------ ------ --------- ---------- Balances, February 28, 1997 1,527,551 $15,276 $4,781,988 ($3,521,747) 35,000 ($38,644) $1,236,873 ========= ======= ========== ============ ====== ========= ==========
See notes to unaudited condensed consolidated financial statements. 4 INTERNATIONAL ELECTRONICS, INC. --------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ---------------------------------------------------- (unaudited)
Six months ended ----------------------------- Feb. 28,1997 Feb. 29, 1996 ------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($41,648) $ 80,549 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 130,766 116,351 Changes in operating assets and liabilities: Accounts receivable 9,308 (105,454) Inventories (13,141) (81,439) Other current assets (4,590) 18,024 Income taxes (17,000) 21,000 Accounts payable and accrued expenses 445,548 139,830 --------- --------- Net cash provided by operating activities 509,243 188,861 CASH FLOWS FROM INVESTING ACTIVITIES AND OTHER: Net purchase of equipment, furniture and improvements (108,885) (70,342) Goodwill and other intangibles and other assets (27,857) 2,258 --------- --------- Net cash used in investing activities and other (136,742) (68,084) CASH FLOWS FROM FINANCING ACTIVITIES: Additions of notes payable and debt obligations - 29,167 Issuance of common stock 2,580 89,057 Reduction of notes payable and debt obligations (423,970) (38,184) --------- --------- Net cash provided by (used in) financing activities (421,390) 80,040 --------- --------- CASH AND EQUIVALENTS: Net increase (decrease) during period (48,889) 200,817 Balances, beginning of period 556,745 327,812 --------- --------- Balances, end of period $ 507,856 $ 528,629 ========= ========= SUPPLEMENTAL SCHEDULE OF NONCASH TRANSACTIONS: Equipment acquired under capitalized leases $ 29,726 $ 12,217
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 28, 1997 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, 1996. 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 equivalent shares consist of stock options and warrants. Primary income (loss) per share is computed by dividing net income (loss) by the weighted average number of common and dilutive common equivalent shares outstanding based on the average market price of the Company's common stock (under the treasury stock method). Income (loss) per 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. 28, 1997 Aug. 31, 1996 -------------- -------------- Federal Deposit Insurance Corporation Agreement $ - $385,091 11-18% capitalized lease obligations, due through April 2001 (Note G) 72,333 66,793 Other 14,000 14,000 13% equipment loan, collateralized by equipment, final payment due July, 1998 8,390 23,083 -------- -------- 94,723 488,967 Less current portion (40,516) (79,516) -------- -------- $ 54,207 $409,451 ======== ========
Federal Deposit Insurance Corporation (FDIC) Agreement - In February, 1997 ------------------------------------------------------ the Company repaid approximately $358,000 representing the balance due the FDIC for the outstanding note originally payable in full on December 31, 1997. The Company recognized an extraordinary gain of $10,446 on this transaction representing a prepayment discount from the FDIC (Note F). The aggregate principal payments on long-term obligations as of February 28, 1997, excluding capital leases are $5,762 (1998) and $16,628 (1999). F. Bank Arrangements: ------------------ In February 1997, the Company established a bank working capital demand line of credit with borrowings up to $1,000,000 and a $250,000 equipment line of credit. Available borrowings under the working capital line are based on a percentage of eligible accounts receivable and inventory. Both lines of credit are at the bank's prime rate of interest and all the Company's assets are collaterized under these arrangements. The credit agreements contain certain restrictive covenants including covenants limiting the payment of dividends, and required minimum current ratio and debt to tangible net worth ratio. As of February 28, 1997, no borrowings have been made under the lines of credit. 7 INTERNATIONAL ELECTRONICS, INC. --------------------------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS --------------------------------------------------------- (continued) (unaudited) G. 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 28, 1997 are as follows: 1998 $ 42,588 1999 20,041 2000 14,712 2001 7,250 2002 1,208 -------- Total minimum lease payments 85,799 Less interest (13,466) -------- Net minimum lease payments 72,333 Less current portion (34,754) -------- Long-term portion $ 37,579 ========
H. Capital Transactions: --------------------- In September 1996, the Company granted warrants to two officers to purchase an aggregate 19,000 shares of common stock at an exercise price of $2.12 per share exercisable for a ten-year period. Each of the warrants were assigned a value of $.10 per share to be paid by the officers. 8 Management's Discussion and Analysis of ------------------------------------------- Financial Condition and Results of Operations --------------------------------------------- Liquidity and Capital Resources - ------------------------------- As of February 28, 1997, the Company had working capital of $614,466 compared to $1,044,480 at August 31, 1996. The ratio of current assets to current liabilities was 1.3 at February 28, 1997 as compared to 1.7 at August 31, 1996. The debt to equity ratio was 1.5 at February 28, 1997 and 1.4 at August 31, 1996. The decrease in working capital and current ratio are the result of the repayment of the loan due the Federal Deposit Insurance Corporation (FDIC). The increase in the debt to equity ratio is the result of increases in accounts payable and accrued expenses offset in part by a reduction in the FDIC debt. Capital expenditures were $138,611 and $82,559 for the six months ended February 28, 1997 and February 29, 1996, respectively. The Company has no current commitments for any material capital expenditures, but the Company anticipates up to $550,000 in capital expenditures for the purchase of office and manufacturing equipment, regulatory testing and tooling costs over the next twelve months. In February, 1997 the Company repaid approximately $358,000 representing the balance due the FDIC for the outstanding note originally payable on December 31, 1997. In February, 1997 the Company also established two bank lines of credit. The lines of credit are for working capital financing up to $1,000,000 and $250,000 for equipment purchases. See Notes E and F to Unaudited Condensed Consolidated Financial Statements. As of February 28, 1997, the Company had no outstanding borrowings under the lines of credit. Management believes that its current cash position, together with internally generated funds at present sales levels and its available bank financing, 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 additional external funding will be obtainable, if such a need should arise. Results of Operations - --------------------- Net sales for the second quarter of fiscal 1997 increased 7% as compared to the second quarter of fiscal 1996. Net sales for the first six months of fiscal 1997 increased 12% as compared to the comparable period of fiscal 1996. The increase in sales for the second quarter and first half of fiscal 1997 primarily reflects increases in access control and keypad sales, offset in part by a reduction in glassbreak detector sales. The ratio of gross profit to sales for the three months ended February 28, 1997 and February 29, 1996 were 39% and 42%, respectively. The ratio of gross profit to sales for the six months ended February 28, 1997 and February 29, 1996 were 40% and 42%, respectively. The decreases are primarily the result of product mix and an increase in certain manufacturing costs. The increase in research and development costs for the second quarter and first half of fiscal 1997 as compared to the comparable periods of fiscal 1996 reflect the hiring of additional personnel and related expenses and an increase in contract services. As a percentage of net sales, selling, general and administrative expenses were 36% and 34% for the three months ended February 28, 1997 and February 29, 1996, respectively and were both 35% for the six months ended February 28, 1997 and February 29, 1996. The increase in expenses is 9 primarily due to an increase in promotional expenses and costs in establishing a European sales office. The gain on extinguishment of debt for the three and six months ended February 28, 1997 of $10,446 represents a prepayment discount from the FDIC. The provision for income taxes for the second quarter and first half of fiscal 1997 represents foreign, federal alternative minimum taxes and state tax expense. NEW ACCOUNTING STANDARDS The Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" will be effective for fiscal 1997. SFAS No. 128 "Earnings per Share" will be effective commencing with the Company's second quarter in fiscal 1998. The Company has not completed evaluating the impact that the adoption of SFAS No. 121 and SFAS No. 128 will have on its financial statements. 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 certain risks and uncertainties as factors which may impact on its operating results which are detailed below. All of these 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. LIMITED FINANCIAL RESOURCES AND LOSSES FROM OPERATIONS. The Company has limited financial resources. It is therefore subject to all the risks generally associated with a small business having limited financial resources. For the six months ended February 28, 1997 and the years ended August 31, 1995 and 1994, the Company has experienced losses of approximately ($42,000), ($231,000) and ($49,000), respectively. For the year ended August 31, 1996 the Company had net income of approximately $162,000. There can be no assurance that the Company will be profitible. Continued operations after the expenditure of the Company's existing cash reserves may require additional working capital to be generated by profitable operations or additional financing. There can be no assurance that profits will continue or that external funding will be obtainable, if such a need should arise. DEPENDENCE ON KEY EMPLOYEES. The business of the Company is dependent upon the efforts of John Waldstein and certain other key management and technical employees. The loss or prolonged disability of such personnel could have a significant adverse effect on the business of the Company. The Company presently maintains a key man life insurance policy of $1,000,000 on John Waldstein, President and Treasurer. LIMITED DESIGN ENGINEERING STAFF. The Company is engaged in an industry which, as a result of extensive research and development, introduces new products on a regular basis. Current competitors or new market entrants may develop new products with features that could adversely effect the competitive position of the Company's products. There can be no assurance that the Company will be successful in selecting, developing, manufacturing and marketing new products or enhancing its existing products or that the Company will be able to respond effectively to 10 technological changes or product announcements by competitors. Any failure or delay in these goals could have a material adverse affect on the Company. FLUCTUATIONS IN SALES AND OPERATING RESULTS. The quarterly growth rates recently experienced by the Company are not necessarily indicative of future quarterly growth rates. Operating results may also fluctuate due to factors such as the timing of new product announcements and introductions by the Company, its major customers and its competitors, market acceptance of new or enhanced versions of the Company's products, changes in the product mix of sales, changes in the relative proportions of sales among distribution channels or among customers within each distribution channel, changes in manufacturing costs, competitive pricing pressures, the gain or loss of significant customers, increased research and development expenses associated with new product introductions and general economic conditions. A limited number of customers have accounted for a significant portion of sales in any particular quarter. 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. A delay in customer orders, resulting in a shift of product shipment from one quarter to another, could have a significant effect on the Company's operating results. In addition, competitive pressure on pricing in a given quarter could adversely effect the Company's operating results, or such price pressure over an extended period could adversely effect the Company's long-term profitability. The Company establishes its expenditure levels for sales and marketing and other 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. CONCENTRATION OF CUSTOMERS. Although the Company has a substantial number of customers, a significant portion of the Company's sales are to a small number of large customers. This concentration of customers may cause net sales and operating results to fluctuate from quarter to quarter based on major customers' requirements and the timing of their orders and shipments. Sales to the Company's largest customer accounted for approximately 33% of the Company's total net sales for the fiscal year ended August 31, 1996. The Company's agreements with its customers generally do not include minimum purchase requirements. There can be no assurance that the Company's major customers will place additional orders, or that the Company will obtain orders of similar magnitude from other customers. The Company's operating results could be materially and adversely effected if any present or future major customer were to choose to reduce its level of orders, were to experience financial, operational or other difficulties that resulted in such a reduction in orders to the Company or were to delay paying or fail to pay the Company's receivables from such customer. In fiscal 1995, the Company lost a major domestic distributor who filed for bankruptcy with accounts receivable due the Company of approximately $80,000. COMPETITION. Other companies in the industry offer products in competition with those of the Company. Many of the companies with which the Company competes are substantially larger, have greater resources and market a larger line of products. The Company expects competition to increase significantly in the future from existing competitors and new companies that may enter the Company's existing or future markets. Increased competition could adversely affect the Company's sales and profitability. There can be no assurance that the Company will be able to continue to compete successfully with its existing competitors or with new competitors. LACK OF PATENT PROTECTION. Although the Company has obtained some patent and copyright protection for certain of its products and software, management believes that competitors may be able to market certain products similar to those sold by the Company. 11 PRODUCTION IN ASIA. The Company presently maintains certain manufacturing molds in Asia and has a significant amount of components for some products manufactured in Asia. There can be no assurance that the Asian political or economic environment will remain sufficiently stable to allow reliable and consistent delivery of product. DEPENDENCE ON SINGLE SOURCE OF SUPPLY. The Company is dependent upon sole source suppliers for a number of key components and parts used in the Company's products. There can be no assurance that these suppliers will be able to meet the Company's future requirements for such components or that the components will be available to the Company at favorable prices. Any extended interruption in the supply or significant increase in price of any such components could have a material adverse effect on the Company's operating results in any given period. FOREIGN SALES. During the year ended August 31, 1996, the Company's foreign sales represented approximately 12% of net sales. There may be a reduction in the Company's foreign sales in the event of significant changes in foreign exchange rates or political and economic instability in foreign countries. LIMITED MARKET FOR COMMON STOCK. There is a limited market for the Company's common stock and there can be no assurance that even this limited market will be sustained. Holders of the Company's common stock may have difficulty selling their shares or may have difficulty selling them at a favorable price. MAINTAIN LISTING ON NASDAQ. In March 1992, the NASD established higher standards for a company's stock to maintain its listing on NASDAQ. The revised standards include maintaining a minimum bid price of $1.00 per share for ten consecutive trading days and shareholders' equity with a minimum balance of $1,000,000. Although the Company has maintained its NASDAQ listing, the Company has, at times, been unable to maintain the $1.00 minimum bid price criteria. In November, 1996, the NASD proposed higher standards for a company to maintain its stock listing on NASDAQ. If adopted as presently proposed, the new standards would result in the Company's common stock losing its listing on NASDAQ. The procedure for adopting such standards provides that there will be a period of public comment and approval by the SEC. It is expected that the final standards will be effective during the second quarter of calendar 1997. One of the presently proposed standards include maintaining minimum net tangible shareholders' equity of $2,000,000. As of February 29, 1997, the Company had net tangible shareholders' equity of approximately $955,000. If this proposed standard is adopted, the Company would not meet the standard and, unless the Company increases its net tangible shareholders' equity to $2,000,000, the Company's common stock would no longer be listed on NASDAQ. At the present time, it is not possible to determine what the new standards will be, whether the Company will be able to achieve and/or maintain the proposed standards, and consequently, it is not possible to know whether the Company will be able to have its common stock listed on NASDAQ. If the Company is unable to maintain its listing on NASDAQ, holders of the Company's common stock may have additional difficulty selling their shares or may have difficulty selling them at a favorable price. VOLATILITY OF STOCK PRICE. The Company's stock price is subject to significant volatility. If revenues or earnings in any quarter fail to meet the investment community's expectations, announcements of new products by the Company or its competitors and other events or factors could have an immediate impact on the Company's stock price. The stock price may also be affected by broader market trends unrelated to the Company's performance. 12 Part II. Other Information - --------------------------- Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- On March 27, 1997, the Company held its Special Meeting in Lieu of the Annual Meeting of Shareholders. At the meeting, shareholders elected the following Board of Directors for the ensuing year: John Waldstein, Robert Voosen, Heath Paley, Diane Balcom, and Robert Prager. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 11.1 Calculation of net income (loss) per share (b) There were no reports on Form 8-K filed for the three months ended February 28, 1997. SIGNATURE --------- Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, who is duly authorized to sign and is Chief Financial and Accounting Officer. International Electronics, Inc. Date: 4/11/97 /s/ John Waldstein ------- ------------------- John Waldstein, President, Treasurer & Chief Financial and Accounting Officer and duly authorized to sign. 13 EX-11.1 2 CALCULATION OF NET INCOME (LOSS) PER SHARE EXHIBIT 11.1 International Electronics, Inc. Calculation of Net Income (Loss) Per Share
Three months ended Six months ended ----------------------------- ------------------------------ Feb. 28, 1997 Feb. 29, 1996 Feb. 28, 1997 Feb. 29, 1996 -------------- ------------- ------------- ------------- PRIMARY NET INCOME (LOSS) PER SHARE - ------------------------------------------------ Weighted average common and equivalent shares: Common stock 1,492,551 1,433,892 1,492,510 1,420,780 Common equivalent shares resulting from dilutive stock options and warrants (treasury stock method using the average market price) - 130,859 - 122,726 --------- ---------- --------- ---------- Total 1,492,551 1,564,751 1,492,510 1,543,506 ========= ========== ========= ========== Net income (loss) ($69,778) $ 50,280 ($41,648) $ 80,549 ========= ========== ========= ========== Net income (loss) per share: Income (loss) before extraordinary gain ($.06) $ .03 ($.04) $ .05 Extraordinary gain .01 - .01 - --------- ---------- --------- ---------- Net income (loss) ($.05) $ .03 ($.03) $ .05 ========= ========== ========= ========== FULLY DILUTED NET INCOME (LOSS) PER SHARE - ----------------------------------------- Weighted average common and equivalent shares: Common stock 1,492,551 1,433,892 1,492,510 1,420,780 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 1,492,551 1,692,230 1,492,510 1,680,923 ========= ========== ========= ========= Net income (loss) ($69,778) $ 50,280 ($41,648) $ 80,549 ========= ========== ========= ========= Net income (loss) per share: Income (loss) before extraordinary gain ($.06) $ .03 ($.04) $ .05 Extraordinary gain .01 - .01 - --------- ---------- --------- --------- Net income (loss) ($.05) $ .03 ($.03) $ .05 ========= ========== ========= ==========
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT OF FINANCIAL CONDITION AT FEBRUARY 28, 1997 (UNAUDITED) AND THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS AUG-31-1997 SEP-01-1996 FEB-28-1997 507,856 0 0 0 841,589 2,418,800 0 0 3,095,414 1,804,334 54,207 0 0 15,276 1,221,597 3,095,414 4,484,837 4,495,953 2,694,080 2,694,080 250,881 0 24,066 (19,648) 22,000 (52,094) 0 10,446 0 (41,648) (.03) (.03)
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