-----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, GsaB6U4LithmVYCT/PDXHYUkkTq2PLAavjPHBFTrJMDKEmQdd0ZRdj8ZLW2iPIuI p8UHvRa+OgL6gXcMDm3uug== 0000740664-97-000003.txt : 19970307 0000740664-97-000003.hdr.sgml : 19970307 ACCESSION NUMBER: 0000740664-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970306 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: R F INDUSTRIES LTD CENTRAL INDEX KEY: 0000740664 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 880168936 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13301 FILM NUMBER: 97551767 BUSINESS ADDRESS: STREET 1: 7620 MIRAMAR RD STREET 2: BLDG 4100 CITY: SAN DIEGO STATE: CA ZIP: 92126 BUSINESS PHONE: 619-549-6340 MAIL ADDRESS: STREET 2: 7620 MIRAMAR RD #4100 CITY: SAN DIEGO STATE: CA ZIP: 92126-4202 FORMER COMPANY: FORMER CONFORMED NAME: CELLTRONICS INC DATE OF NAME CHANGE: 19910204 10QSB 1 QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FOR 10-QSB Quarterly Report Under Section 13 or 15 (d) of Securities Exchange Act of 1934 For Quarter ended January 31, 1997 Commission File Number 0-13301 RF INDUSTRIES, LTD. (Exact name of registrant as specified in its charter) Nevada 88-0168936 (State of Incorporation) (I.R.S. Employer Identification No.) 7610 Miramar Road, Bldg. 6000, San Diego, California 92126-4202 (Address of principal executive offices) (Zip Code) (619) 549-6340 FAX (619) 549-6345 -------------- ------------------ (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock at the latest practicable date. As of January 31, 1997, the registrant had 2,778,191 shares of Common Stock, $.01 par value, issued and outstanding. Part I. FINANCIAL INFORMATION Item 1: Financial Statements BALANCE SHEET January 31 October 31 1997 1996 ----------- ----------- (Unaudited) (Audited) ASSETS - ------------------ CURRENT ASSETS Cash ............................................... $ 714,928 $ 403,547 Investments in available-for-sale securities ....... 613,650 604,186 Trade accounts receivable less allowance for doubtful accounts of $13,299 ................... 666,476 703,097 Inventories - Note 3 ............................... 1,880,626 1,861,856 Prepaid expenses and deposits ...................... 298,087 276,109 Deferred tax assets ................................ 98,000 60,000 ---------- ---------- TOTAL CURRENT ASSETS .......................... 4,271,767 3,908,795 FIXED ASSETS Furniture and office equipment ..................... 111,493 107,633 Equipment and tooling .............................. 381,891 381,891 ---------- ---------- Fixed assets, at cost ......................... 493,384 489,524 Less accumulated depreciation and amortization ..... 389,037 377,715 ---------- ---------- NET FIXED ASSETS .............................. 104,347 111,809 Deferred tax assets ................................ 38,000 Other assets ....................................... 4,900 4,900 ---------- ---------- TOTAL ASSETS .................................. $4,381,014 $4,063,504 ========== ========== See Notes to Financial Statements Item 1: Financial Statements (continued) BALANCE SHEET January 31 October 31 1997 1996 ------------ ----------- (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY - ----------------------- CURRENT LIABILITIES Accounts payable ............................. $ 130,066 $ 186,250 Accrued expenses ............................. 365,096 268,015 ----------- ----------- TOTAL CURRENT LIABILITIES ............... 495,162 454,265 TOTAL LIABILITIES STOCKHOLDERS' EQUITY Common Stock - $.01 par value Authorized - 10,000,000 shares Issued & outstanding 2,778,191 shares ..... 27,782 27,782 Capital paid in excess of par value .......... 4,777,017 3,868,642 Retained earnings ............................ 407,019 166,547 Unearned compensation ........................ (1,325,966) (453,732) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY ............... 3,885,852 3,609,239 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .................. $ 4,381,014 $ 4,063,504 =========== =========== See Notes to Financial Statements Item 1: Financial Statements (continued) STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended January 31 ------------------------ 1997 1996 ---------- ---------- Net sales ........................................ $1,928,097 $ 909,965 Cost of sales .................................... 1,070,432 450,965 ---------- ---------- Gross profit .................................... 857,665 459,000 Operating expenses: Engineering ................................... 111,828 104,657 Selling and general ........................... 337,042 280,308 ---------- ---------- Total ...................................... 448,870 384,965 ---------- ---------- Income from operations ........................ 408,795 74,035 Interest income, net ............................ 14,674 14,011 ---------- ---------- Income before provision for income taxes ...... 423,469 88,046 Provision for income taxes .................... 183,000 20,000 ---------- ---------- Net income ................................. $ 240,469 $ 68,046 ========== ========== Per share data: Net income ................................. $ 0.08 $ 0.02 ========== ========== Weighted average common and common equivalent shares outstanding ............................... 3,105,646 2,785,969 ========== ========== See Notes to Financial Statements STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended January 31 --------------------- 1997 1996 ------- ------- OPERATING ACTIVITIES Net income ........................................ $ 240,472 $ 68,046 Adjustments to reconcile net income to net cash provided by (used in) operations Depreciation and amortization ..................... 11,322 11,032 Amortization of unearned compensation ............. 36,141 9,582 Change in assets - (incr) decr: Accounts receivable - trade ..................... 36,621 (221,387) Inventories ..................................... (18,770) (53,671) Other assets .................................... (21,978) 15,070 Change in liabilities - incr (decr): Accounts payable ................................ (56,184) (28,809) Accrued expenses ................................ 97,081 56,717 --------- --------- Net cash provided by (used in) operating activities .......................... 324,705 (143,420) --------- --------- INVESTING ACTIVITIES Purchase of available for sale securities ......... (9,464) (18,145) Capital Expenditures .............................. (3,860) (17,623) --------- --------- Net cash used in investing activities .......... (13,324) (35,768) --------- --------- FINANCING ACTIVITIES Proceeds from exercise of stock options ........... 0 20,000 --------- --------- Net cash provided by financing activities ......... 0 20,000 --------- --------- Net decrease in cash and cash equivalents ............ 311,381 (159,188) Cash and cash equivalents at the beginning of period . 403,547 211,290 --------- --------- Cash and cash equivalents at the end of period ....... $ 714,928 $ 52,102 ========= ========= See Notes to Financial Statements NOTES TO FINANCIAL STATEMENTS Note 1 - Management's opinion In the opinion of management, the accompanying financial statements contain all adjustments necessary to present fairly the financial position of RF Industries, Ltd. as of January 31, 1997 and the results of operations and cash flows for the three month periods ended January 31, 1997 and 1996. Note 2 - Interim reporting The result of operations for the three month periods ended January 31, 1997 and 1996 are not necessarily indicative of the results to be expected for the remainder of the year. Note 3 - Components of Inventory January 31 October 31 1997 1996 ---------- ---------- (Unaudited) (Audited) Raw materials & supplies ........ $ 375,626 $ 379,390 Finished goods .................. 1,505,000 1,482,466 ---------- ---------- Total .................. $1,880,626 $1,861,856 ========== ========== Note 4 - Compensatory stock options During the quarter ended January 31, 1997, in connection with the employment agreements, two executives received options to purchase 100,000 shares of common stock each at $.10 per share. These options will be earned ratably over a ten year period. In connection with another employment agreement, another executive was granted an option to purchase 15,000 shares of common stock at $4.40 per share. This option will be earned over a two year period. As a result of these option, unearned compensation, representing the difference between the fair market value of a common share at the date of grant and the option strike price multiplied by the number of options granted, was increased by $908,375. Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months 1997 vs. Three Months 1996 Sales increased $1,018,132, or 112% to $1,928,097 for the quarter ended January 31, 1997 compared to $909,965 in the first quarter of fiscal 1996. The sales gain is attributable to the company's expanded RF Connectors distribution, which helped raise Connectors sales 70% to $1,202,000. Net sales also benefited from gains in Neulink wireless products, which reached $726,000 for the quarter compared to $196,000 last year. Cost of sales increased $619,467 and increased, as a percent of sales, to 56% from 50% last year. Cost of sales increased due to the higher portion of Neulink product shipped compared to 1996. The company's Neulink products have lower gross margins. Engineering expenses increased $7,171. The majority of engineering expenses during the quarter were related to the development of various modems. As a percent of sales, engineering expenses declined to 6% from 12% of sales last year. Selling and general expenses increased $56,734, or 20% for the three months ended January 31, 1997 compared to the same period ended January 31, 1996. The increase is due to higher labor, sales, advertising and marketing costs, trade show expenses and the design of a new catalog. The company is incurring expenses for promoting its products at numerous trade shows throughout North America. Expenses associated with Hytek's consulting agreement also account for a portion of the increased expense. As a percentage of sales, selling and general expenses declined to 17% from 31% of sales last year. The decline is due to the company's increased sales and cost control efforts. The provision for income taxes increased $163,000 to $183,000. The increase in the company's tax rate is due to the absence of tax loss carry forwards which reduced the company's tax rate last year. Material changes in financial condition: Cash and investments increased $320,845 to $1,328,578, compared to the October 31, 1996 fiscal year end balance of $1,007,733. The increase in cash is attributable to the company's increased sales and improved profitability. Management anticipates that combined cash and cash equivalents, together with internally generated capital, will be adequate to fund the company throughout the current fiscal year. Trade accounts receivable declined due to expanded collection efforts by the accounts receivable department. Inventories increased $18,770 for the quarter ended January 31, 1997, and remain at a relatively high level to enable the company rapidly to meet customer and distributor demands. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Prepaid expenses increased $21,978 due to more deposits for inventory purchases. Accounts payable decreased $56,184 compared to their October 31, 1996 level. Payables remain in control due to the company's strong cash flow. Accrued expenses increased $97,081. The increase is due to increased income tax accrual. Working capital increased $322,075, or 9% from fiscal year end levels. This is primarily due to the company's profitability and is accounted for by high inventory levels and a significant increase in cash. PART II. OTHER INFORMATION Items 1-4: Not applicable. Item 5: Information required in lieu of Form 8-K None. Item 6: (a) Exhibits on Form 8-K: 10.23 Employment Agreement - Perlman 10.24 Employment Agreement - LaFay 10.25 Employment Agreement - Ekroos b) Reports on Form 8-K: Noreports on Form 8-K were filed during the fiscal quarter ended January 31, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Acto of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. RF INDUSTRIES, LTD. Dated: March 7, 1997 By: Howard F. Hill ------------------------------------ Howard F. Hill, President Chief Executive Officer Dated: March 7, 1997 By: Howard F. Hill ------------------------------------ Howard F. Hill, President Chief Financial Officer EX-27 2 ART. 5 FDS FOR 1ST QUATER 10-QSB
5 3-MOS OCT-31-1996 NOV-01-1996 JAN-31-1997 714,928 613,650 679,775 13,299 1,880,626 4,271,767 493,384 389,037 4,381,014 130,066 0 0 0 27,782 3,858,070 4,381,014 1,928,097 1,928,097 1,070,432 1,519,302 0 0 (14,674) 423,469 183,000 240,469 0 0 0 240,469 .08 .08
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