-----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, R+pqcGylvi2Fs+kCK7jH8tl1KAt6faB4s1joLft1roVcasZiGIbjQyEs0VwxCa0e 6XJ67sIl18OBhYM5Jdodpg== 0000740664-98-000006.txt : 19980827 0000740664-98-000006.hdr.sgml : 19980827 ACCESSION NUMBER: 0000740664-98-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980731 FILED AS OF DATE: 19980826 SROS: NASD 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: SEC FILE NUMBER: 000-13301 FILM NUMBER: 98698294 BUSINESS ADDRESS: STREET 1: 7610 MIRAMAR RD STREET 2: BLDG 6000 CITY: SAN DIEGO STATE: CA ZIP: 92126 BUSINESS PHONE: 6195496340 MAIL ADDRESS: STREET 1: 7620 MIRAMAR RD #4100 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 3RD QUARTER 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 July 31, 1998 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 July 31, 1998, the registrant had 3,078,598 shares of Common Stock, $.01 par value, issued and outstanding. 1 Part I. FINANCIAL INFORMATION Item 1: Financial Statements BALANCE SHEET July 31 October 31 1998 1997 ---------- ---------- (Unaudited) (Audited) ASSETS - ------------------ CURRENT ASSETS Cash ............................................... $1,197,509 $ 877,587 Investments in available-for-sale securities ....... 1,111,221 642,799 Trade accounts receivable less allowance for doubtful accounts of $22,227 ................... 752,961 765,433 Inventories - Note 3 ............................... 2,409,689 2,251,582 Prepaid expenses and deposits ...................... 235,595 293,218 Deferred tax assets ................................ 42,000 42,000 Note receivable from stockholder ................... 70,000 70,000 ---------- ---------- TOTAL CURRENT ASSETS .......................... 5,818,975 4,942,619 FIXED ASSETS Furniture and office equipment ..................... 139,657 108,206 Equipment and tooling .............................. 489,922 436,361 ---------- ---------- Fixed assets, at cost ......................... 629,579 544,567 Less accumulated depreciation and amortization ..... 457,993 425,427 ---------- ---------- NET FIXED ASSETS .............................. 171,586 119,140 Deferred tax assets ................................ 89,000 89,000 Other assets ....................................... 4,900 4,900 ---------- ---------- TOTAL ASSETS .................................. $6,084,461 $5,155,659 ========== ========== See Notes to Financial Statements 2 BALANCE SHEET July 31 October 31 1998 1997 ---------- ---------- LIABILITIES AND (Unaudited) (Audited) STOCKHOLDERS' EQUITY - --------------------------------------- CURRENT LIABILITIES Accounts payable ............................. $ 234,570 $ 154,256 Accrued expenses ............................. 371,946 295,387 ----------- ----------- TOTAL CURRENT LIABILITIES ............... 606,516 449,643 STOCKHOLDERS' EQUITY Common Stock - $.01 par value Authorized - 10,000,000 shares Issued & outstanding 3,078,598 shares ...... 30,786 30,646 Capital paid in excess of par value .......... 4,373,868 4,803,366 Retained earnings ............................ 1,438,311 767,451 Unearned compensation ........................ (365,020) (895,447) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY .............. 5,477,945 4,706,016 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ................. $ 6,084,461 $ 5,155,659 =========== =========== See Notes to Financial Statements 3
STATEMENTS OF OPERATIONS (Unaudited) (Unaudited) Three Months Ended Nine Months Ended July 31 July 31 --------------------- --------------------- 1998 1997 1998 1997 Net Sales .......................... $1,585,907 $1,523,442 $4,901,897 $5,202,370 Cost of Sales ...................... 783,650 796,540 2,404,007 2,917,852 ---------- ---------- ---------- ---------- Gross Profit .................. 802,257 726,902 2,497,890 2,284,518 ---------- ---------- ---------- ---------- Operating expenses: Engineering ................... 110,356 106,280 355,982 327,875 Selling and general ........... 381,486 360,419 1,102,912 1,155,500 ---------- ---------- ---------- ---------- Total ....................... 491,842 466,699 1,458,894 1,483,375 ---------- ---------- ---------- ---------- Operating income .............. 310,415 260,203 1,038,996 801,143 Interest income .................... 34,502 17,834 81,864 48,534 ---------- ---------- ---------- ---------- Income before provision for income tax ..................... 344,917 278,037 1,120,860 849,677 Provision for state & federal income tax ......................... 138,000 112,000 450,000 340,000 ---------- ---------- ---------- ---------- Net income .................... $ 206,917 $ 166,037 $ 670,860 $ 509,677 ========== ========== ========== ========== Per share data: Net income .................... $ 0.06 $ 0.05 $ 0.20 $ 0.16 ========== ========== ========== ========== Weighted average common and common equivalent shares outstanding ........................ 3,414,859 3,315,157 3,405,355 3,153,946 ========== ========== ========== ==========
See Notes to Financial Statements 4
STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended July 31 ------------------------- 1998 1997 ---------- ---------- OPERATING ACTIVITIES Net income ............................................. $ 670,860 $ 509,677 Adjustments to reconcile net income to net cash provided by operations Depreciation and amortization ..................... 32,566 31,234 Amortization of unearned compensation ............. 99,669 461,660 Change in assets - (incr) decr: Accounts receivable - trade .................. 12,472 (84,190) Inventories .................................. (158,107) (341,226) Other assets ................................. 57,623 (194,609) Change in liabilities - incr (decr): Accounts payable ............................. 80,314 112,143 Accrued expenses ............................. 76,559 (21,813) ----------- ----------- Net cash provided by operating activities ...................... 871,956 472,876 ----------- ----------- INVESTING ACTIVITIES Purchase of available-for-sale securities ..... (468,422) (28,662) Capital expenditures .......................... (85,012) (51,298) ----------- ----------- Net cash used in investing activities ................ (553,434) (79,960) ----------- ----------- FINANCING ACTIVITIES Proceeds from exercise of common stock options 1,400 1,584 ----------- ----------- Net cash provided by financing activities .... 1,400 1,584 ----------- ----------- Net increase in cash and cash equivalents ........................... 319,922 394,500 Cash and cash equivalents at the beginning of the period ........................ 877,587 403,547 ----------- ----------- Cash and cash equivalents at the end of period .... $ 1,197,509 $ 798,047 =========== ===========
See Notes to Financial Statements 5 NOTES TO FINANCIAL STATEMENTS Note 1 - Management's opinion In the opinion of management, the accompanying financial statements contain all adjustments necessary to present the financial position of RF Industries, Ltd. as of July 31, 1998 and the results of operations for the three month and nine month periods ended July 31, 1998 and 1997. Note 2 - Interim reporting The results of operation for the three month and nine month periods ended July 31, 1998 and 1997 are not necessarily indicative of the results to be expected for the remainder of the year. Note 3 - Components of Inventory July 31, 1998 --------------------- (Unaudited) Raw material and supplies.......... $ 294,588 Finished goods .................... 2,115,101 ---------- TOTAL ............................ $2,409,689 6 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months 1998 vs. Three Months 1997 Sales increased 4.1%, or $62,465, to $1,585,907 from $1,523,442 in the third quarter of fiscal 1998. Sales at RF Connector increased 10.1% to $1,391,239 compared to $1,262,756 for the same quarter last year. The increase in Connector sales was due to an improved product mix and cable product sales. Sales at Neulink decreased 25.3% to $194,668 compared to $260,686 last year, as this division experienced delays in receipt of orders from a number of its major customers. Cost of sales decreased 1.6%, or $12,890, to $783,650 from $796,540 and as a percentage of sales declined to 49.4% of sales from 52.2% last year. The higher margin on sales is attributable to an improved product mix during the quarter. Engineering expenses increased 3.8%, or $4,076, to $110,356 from $106,280 last year and remained at 6.9% of sales for both quarters. Selling and general expenses increased 5.8%, or $21,067, to $381,486 from $360,419 last year, and increased, as a percent of sales, to 24% from 23.6% last year. Selling and general expenses were higher due to greater customer support, training, increased trade shows and new hires. Interest income increased $16,668 to $34,502 from $17,834 last year due to the company's higher average cash balances and an increase in the rate of interest received. Nine Months 1998 vs. Nine Months 1997 Net sales decreased 5.7%, or $300,473, to $4,901,897 from $5,202,370 in the first nine months of fiscal 1998. RF Connectors sales increased 4.7% to $3,961,022 from $3,782,070 in the same period last year. Connectors' sales in the first nine months of fiscal 1998 increased due to the introduction of cable assembly products and an improved product mix. Neulink sales were $940,874, down 33.7% from the same period last year, due to delays in orders from major customers. Cost of sales decreased 17.6%, or $513,845, to $2,404,007 from $2,917,852 last year and as a percentage of sales decreased to 49% from 56% last year. The decline in cost of sales is due to an improved product mix at both Connectors and Neulink divisions. Engineering expenses increased 8.5%, or $28,107, to $355,982 from $327,875 last year and increased, as a percentage of sales, to 7.3% from 6.3% last year. Engineering expenses increased to support the development of new wireless products. These expenses vary considerably depending upon the development of new Connector or wireless products. Selling and general expenses decreased 4.5%, or $52,588, to $1,102,912 from $1,155,500. Selling and general expenses remained at 22% of sales for both periods. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Interest income increased $33,330 to $81,864 from $48,534 due to the company's higher average cash balances and an increase in the rate of interest received. The provision for income taxes increased $110,000 due to higher net earnings, which resulted in a blended tax rate of 40% for the nine month period. Material changes in financial condition: Improved operating profitability helped raise cash $319,922 to $1,197,509 compared to the October 31, 1997 fiscal year end balance of $877,587. Cash and cash equivalents increased to $2,308,730 at July 31, 1998, compared to $1,520,386 at October 31, 1997. Trade accounts receivable decreased $12,472, or 1.6% to $752,961 compared to the October 31, 1997 balance of $765,433. Trade accounts receivable have remained relatively constant at approximately 50% of quarterly sales. Inventories increased $158,107 compared to the October 31, 1997 inventory level as a result of purchases to meet higher customer demand. Inventory increases have been concentrated in the Connector products. Prepaid expenses and deposits decreased $57,623 from October 31, 1997. This decrease is primarily due to fewer deposits on inventory purchases. PART II. OTHER INFORMATION Items 1-4: Not applicable Item 5: Information required in lieu of Form 8-K None. Item 6: Exhibits and Reports on 8-K (a) None required (b) Reports on Form 8-K No reports on Form 8-K were filed during fiscal quarter ended July 31, 1998. 8 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 thereunto duly authorized. RF INDUSTRIES, LTD. Dated: August 26, 1998 By: /s/ Howard F. Hill ------------------------------- Howard F. Hill, President Chief Executive Officer Dated: August 26 , 1998 By: /s/ Terrie A. Gross ------------------------------- Terrie A. Gross Chief Financial Officer EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-QSB
5 9-MOS OCT-31-1997 NOV-01-1997 JUL-31-1998 1,197,509 1,111,221 775,188 22,227 2,409,689 5,818,975 629,579 457,993 6,084,461 606,516 0 0 0 30,786 5,447,159 6,084,461 4,901,897 4,901,897 2,404,007 3,862,901 0 0 (81,864) 1,120,860 450,000 670,860 0 0 0 670,860 .20 .20
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