-----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, Vv7esz5Yn2FXLWc43eY4czjdzw3XgBkOoUpivX/cBQBInaUcd6HtLpmYeIP53LeZ qrYE23P3A+ZkpBGMQRGPYA== 0000740664-02-000036.txt : 20020415 0000740664-02-000036.hdr.sgml : 20020415 ACCESSION NUMBER: 0000740664-02-000036 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020131 FILED AS OF DATE: 20020318 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: 02577237 BUSINESS ADDRESS: STREET 1: 7610 MIRAMAR RD STREET 2: BLDG 6000 CITY: SAN DIEGO STATE: CA ZIP: 92126-2313 BUSINESS PHONE: 8585496340 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 qsbjan2002.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB Quarterly Report Under Section 13 or 15 (d) of Securities Exchange Act of 1934 for Quarter ended January 31, 2002 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., Suite 6000, San Diego, California 92126-4202 (Address of principal executive offices) (Zip Code) (858) 549-6340 FAX (858) 549-6345 (Issuer's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None. Check whether the issuer (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 --- State the number of shares outstanding of each of the issuer's classes of common stock at the latest practicable date. As of January 31, 2002, the registrant had 3,409,354 outstanding shares of Common Stock, $.01 par value, issued. Transitional small business disclosure format Yes No X --- Part I. FINANCIAL INFORMATION RF INDUSTRIES, LTD. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS January 31 October 31 2002 2001 ----------- ---------- (Unaudited) ASSETS - ------------- CURRENT ASSETS Cash and cash equivalents ............................ $1,212,451 $ 915,538 Investments in available-for-sale securities ......... 1,774,305 1,744,851 Trade accounts receivable, net of allowance for doubtful accounts of $42,000 ..................... 1,058,459 981,803 Notes receivable ..................................... 12,000 12,000 Income tax refund receivable ......................... 165,192 216,192 Inventories .......................................... 4,489,077 4,746,125 Other current assets ................................. 180,780 111,214 Deferred tax assets .................................. 150,595 155,700 ---------- ---------- TOTAL CURRENT ASSETS ............................ 9,042,859 8,883,423 ---------- ---------- PROPERTY AND EQUIPMENT Equipment and tooling ................................ 1,055,473 1,050,922 Furniture and office equipment ....................... 243,357 243,357 ---------- ---------- Fixed assets, at cost ........................... 1,298,830 1,294,279 Less accumulated depreciation ................... 778,464 737,279 ---------- ---------- NET FIXED ASSETS ................................ 520,366 557,000 ---------- ---------- Goodwill, net of accumulated amortization of $11,646 ............................. 163,052 163,052 Note receivable from stockholder ..................... 70,000 70,000 Other assets ......................................... 11,471 11,471 ---------- ---------- TOTAL ASSETS $9,807,748 $9,684,946 ========== ========== See Notes to Condensed Consolidated Unaudited Financial Statements RF INDUSTRIES, LTD. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS January 31 October 31 2002 2001 ----------- ---------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY - ----------------------- CURRENT LIABILITIES Accounts payable ..................................... $ 234,897 $ 107,145 Current portion of notes payable ..................... 41,663 50,000 Accrued expenses ..................................... 208,183 278,407 ---------- ---------- Total current liabilities ...................... 484,743 435,552 Notes payable, net of current portion ................ 39,163 Deferred tax liabilities ............................. 25,700 25,700 ---------- ---------- TOTAL LIABILITIES ............................... 510,443 500,415 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common Stock - authorized 10,000,000 shares of $.01 par value; 3,441,054 shares issued ...................................... 34,410 34,410 Additional paid-in capital............................ 4,695,147 4,695,147 Retained earnings .................................... 4,625,564 4,543,376 Unearned compensation ................................ (23,490) Accumulated other comprehensive loss ................. (890) (7,986) Receivables from sale of stock ....................... (1,715) (1,715) Treasury stock, at cost - 31,700 ..................... (55,211) (55,211) ---------- ---------- TOTAL STOCKHOLDERS' EQUITY ........................ 9,297,305 9,184,531 ---------- ---------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ......................... $ 9,807,748 $ 9,684,946 ========== ========== See Notes to Condensed Consolidated Unaudited Financial Statements Item 1: Financial Statements (continued) RF INDUSTRIES, LTD. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) Three Months Ended January 31 ----------------------- INCOME: 2002 2001 --------- --------- Net Sales ......................................... $ 2,184,917 $ 2,348,601 Cost of Sales ...................................... 1,149,680 1,220,164 ----------- ----------- Gross profit ..................................... 1,035,237 1,128,437 ----------- ----------- Operating expenses: Engineering ..................................... 164,035 115,729 Selling and general ............................. 769,983 651,555 ----------- ----------- Totals .................................... 934,018 767,284 ----------- ----------- Operating income ................................... 101,219 361,153 ----------- ----------- Other income: Commissions ................................... 8,215 18,073 Interest ...................................... 23,754 31,508 ----------- ----------- Totals .................................. 31,969 49,581 ----------- ----------- Income before provision for income tax ............. 133,188 410,734 Provision for income tax ........................... 51,000 165,500 ----------- ----------- Net income $ 82,188 $ 245,234 =========== =========== Basic earnings per share ........................... $ 0.02 $ 0.07 =========== =========== Diluted earnings per share ......................... $ 0.02 $ 0.06 =========== =========== Basic weighted average shares outstanding .......... 3,409,354 3,402,554 =========== =========== Diluted weighted average shares outstanding ........ 3,843,766 4,027,473 =========== =========== COMPREHENSIVE INCOME: Net income ......................................... $ 82,188 $ 245,234 Unrealized gain (loss)on available-for-sale securities ....................................... 7,096 (20,761) ----------- ----------- $ 89,284 $ 224,473 Total comprehensive income ................... =========== =========== See Notes to Condensed Consolidated Unaudited Financial Statements Item 1: Financial Statements (continued)
RF INDUSTRIES, LTD. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended January ---------------------------- 2002 2001 ----------- ------------ OPERATING ACTIVITIES Net income .............................................. $ 82,188 $ 245,234 Adjustments to reconcile net income to net cash provided by (used in)operating activities Inventory deposit write-offs ....................... 30,294 Depreciation and amortization ...................... 41,185 27,111 Amortization of unearned compensation .............. 23,490 23,514 Changes in operating assets and liabilities, net of acquisition: Trade accounts receivable ......................... (76,656) 381,308 Inventories ....................................... 257,048 (859,369) Other assets ...................................... (18,566) (6,734) Accounts payable .................................. 127,752 (217,607) Accrued expenses .................................. (70,224) (129,602) ----------- ----------- Net cash provided by (used in) operating activities 366,217 (505,851) ----------- ----------- INVESTING ACTIVITIES Proceeds from sale of (investment in) securities .. (17,253) 473,377 Capital expenditures .............................. (4,551) (16,548) Payment for acquisition, net of cash acquired ..... (147,078) ----------- ----------- Net cash provided by (used in) investing activities (21,804) 309,751 ----------- ----------- FINANCING ACTIVITIES Payments on loans payable ......................... (47,500) (150,572) Proceeds from exercise of common stock options .... 1,561 ----------- ----------- Net cash used in financing activities ............. (47,500) (149,011) ----------- ----------- Net increase (decrease) in cash and cash equivalents ............................ 296,913 (345,111) Cash and cash equivalents at the beginning of the period ......................... 915,538 557,923 ----------- ----------- Cash and cash equivalents at the end of period .... $ 1,212,451 $ 212,812 =========== =========== SUPPLEMENTARY CASH FLOW DATA: Taxes paid ........................................ $ 255,000 =========== Noncash investing and financing activities: Fair value of assets acquired ..................... $ 496,504 Liabilities assumed ............................... (207,341) Seller financing .................................. (139,163) ----------- Cash paid ......................................... $ 150,000 ===========
See Notes to Condensed Consolidated Unaudited Financial Statements RF INDUSTRIES, LTD. AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Unaudited interim financial statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month periods ended January 31, 2002 are not necessarily indicative of the results that may be expected for the year ending October 31, 2002. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended October 31, 2001. Note 2 - Components of inventory January 31, 2002 October 31, 2001 ----------------- ------------------ (Unaudited) Raw material and supplies ..... $ 763,143 $ 822,180 Finished goods................. 3,725,934 3,923,945 ----------- ----------- TOTALS $ 4,489,077 $ 4,746,125 =========== =========== Note 3 - Earnings (loss) per share: The Company follows the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share", which requires the presentation of "basic" and "diluted" earnings per common share, as further explained in Note 1 of the notes to the audited financial statements of the Company, included in Form 10-KSB for the fiscal year ended October 31, 2001. Basic earnings per share is computed by dividing net earnings by the weighted average number of common stock outstanding during the period. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares of common stock increased by the effects of assuming that other potentially dilutive securities (such as stock options) outstanding during the period had been exercised. The following table summarizes basic and diluted shares: Three Months Ended January 31 2002 2001 ---------- ---------- Weighted average shares outstanding for basic net earnings per share .............. 3,409,354 3,402,554 Add effects of potentially dilutive securities- assumed exercised of stock options ........ 434,412 624,919 --------- --------- Weighted average shares for diluted net earnings per share ...................... 3,843,766 4,027,473 ========== ========= Note 4 - Segment Information Net sales and income (loss) before provision for income taxes for the three months ended January 31, 2002 and 2001 follows:
Intercompany Common/ Connector Neulink Sales Bioconnect Corporate Total ----------- --------- ------------ ------------ ---------- --------- 2002 - ----------- Net sales .............. $1,770,750 $349,232 $(105,478) $170,413 $2,184,917 Income (loss) before provision for income taxes .............. 212,089 64,480 (167,135) $23,754 133,188 Depreciation and amortization ........ 23,393 5,001 12,791 41,185 Total assets ........... 8,593,051 1,105,355 109,342 9,807,748 Additions to property and equipment ....... 3,747 804 4,551 2001 - ----------- Net sales .............. $2,053,276 $245,254 $50,071 $2,348,601 Income (loss) before provision for income taxes ............... 624,042 (141,294) (67,328) $(4,686) 410,734 Depreciation and amortization ........ 18,357 3,318 5,436 27,111 Total assets ........... 8,000,742 1,240,142 444,062 9,684,946 Additions to property and equipment ....... 16,548 16,548
Note 5 - New accounting policy The Company has elected early adoption of SFAS No. 142, "Goodwill and Other Intangible Assets", which requires that goodwill and certain intangible assets, including those recorded in past business combinations, no longer be amortized against earnings, but instead be tested for impairment at least annually. The Company believes there isno material impact on the financial statements. Item 2: Management's discussion and analysis of financial condition and results of operations This report contains forward-looking statements. These statements relate to future events or the Company's future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "except," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Company, nor any other person, assumes responsibility for the accuracy and completeness of the forward-looking statements. The Company is under no obligation to update any of the forward-looking statements after the filing of this Quarterly Report on Form 10-QSB to conform such statements to actual results or to changes in its expectations. The following discussion should be read in conjunction with the Company's financial statements and the related notes and other financial information appearing elsewhere in this Form 10-QSB. Readers are also urged to carefully review and consider the various disclosures made by the Company which attempt to advise interested parties of the factors which affect the Company's business, including without limitation the disclosures made under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations," under the caption "Risk Factors," and the audited financial statements and related notes included in the Company's Annual Report filed on Form 10-KSB for the year ended October 31, 2001 and other reports and filings made with the Securities and Exchange Commission. Liquidity and Capital Resources Management believes that existing current assets and the amount of cash it anticipates it will generate from current operations will be sufficient to fund the anticipated liquidity and capital resource needs of the Company for the fiscal year ending October 31, 2002. The Company does not, however, currently have any commercial banking arrangements providing for loans, credit facilities or similar matters should the Company need to obtain additional capital. Management believes that its existing assets and the cash expected to be generated from operations will be sufficient during the current fiscal year are based on the following: o As of January 31, 2002, the amount of cash, cash equivalents, and available-for-sale securities was equal to $2,986,756 in the aggregate. o As of January 31, 2002, the Company had $9,042,859 in current assets, and only $484,743 of current liabilities o As of January 31, 2002, the Company had only $41,663 of outstanding indebtedness (other than accounts payable and other current liabilities). The Company does not believe it will need material additional capital equipment in fiscal 2002. In the past, the Company has financed some of its fixed asset requirements through capital leases. No additional capital equipment purchases have been currently identified that would require significant additional leasing or capital obligations during fiscal 2002. Management also believes that based on the Company's financial condition at January 31, 2002, the absence of outstanding bank debt and recent operating results, the Company would be able to obtain bank loans to finance its expansion, if necessary, although there can be no assurance any bank loan would be obtainable, or if obtained, would be on favorable terms or conditions. Net cash provided by operating activities for the first three months of 2002 was $366,217 whereas cash used in operating activities for the first quarter of 2001 was $505,851. Non cash outlays for inventory deposit write-offs, depreciation and amortization, and amortization of unearned income for the first quarter were $64,675 compared to $80,919 the previous year. Trade accounts receivable increased $76,656 compared to a decrease of $381,308 the previous year. The increase is due to some slow paying accounts due to our economy. Accounts payable increased $127,752 compared to an decrease of $217,607 the previous year. Accrued expenses decreased $70,224 compared to an decrease of $129,602 the previous year. This is attributable to the Company's good cash position. Net cash used in investing activities was $21,804 for the first quarter ended January 31, 2002, and consisted of investments in securities of $17,253 and capital expenditures of $4,551. Net cash used in financing activities was $47,500 for the quarter ended January 31, 2002, and consisted of payment on the loan payable to Bioconnect. As of Janurary 31, 2002 the Company had $1,212,451 in cash and cash equivalents and $1,774,305 in investments, as compared to $915,538 in cash and cash equivalents and $1,744,851 in investments at October 31, 2001. Three Months 2002 vs. Three Months 2001 Net sales decreased 7%, or $163,600, to $2,185,000 from $2,348,600 in the first three months of fiscal 2002. RF Connectors sales decreased 14% to $1,770,750, compared to $2,053,300 for the same period last year, due to overall slow down in our industry. Sales at RF Neulink increased 42% to $349,200 compared to $245,250 last year. This increase can be attributed to stronger sales in new application areas. Bioconnect's first quarter sales were $170,400, including $105,500 in intercompany sales, compared to $50,000 for December and January last year. Cost of sales decreased 6%, or $70,000 to $1,150,000 from $1,220,000 last year. The decrease is due to the decrease in sales. Engineering expenses increased $48,000, or 41%, from $115,700 last year. This increase can be attributed to added personnel and expenses associated with the expansion of our engineering departments to meet the increased business demands and development of product. Selling and general expenses increased 18% or $118,400, to $770,000 from $651,600 last year. The increase is due to increased travel, advertising, insurance expenses and development of a new catalog. Net interest income decreased $7,700 to $23,800 from $31,500 the previous year. Commissions for the Neulink divisions sales were $8,200 compared to $18,000. MATERIAL CHANGES IN FINANCIAL CONDITION: Cash increased $296,913 to $1,212,451 compared to the October 31, 2001 fiscal year balance of $915,538. Cash and investments are $ 2,986,756 at January 31, 2002. Trade accounts receivable increased $76,656, or 8% to $1,058,459 compared to the October 31, 2001 balance of $981,803. This increase is due to some slow-down in payment habits of a few customers. Inventories, as of January 31, 2002 were $4,489,077, as $257,048 decrease from $4,746,125 on October 31, 2001. As part of its business strategy, and because of its off-shore manufacturing arrangements, the Company normally maintains a high level of inventory. Due to an overall slow-down in our industry, inventory levels are decreasing to maintain the correct level of customer demand. Other current assets, including prepaid expenses and deposits, increased $69,800 to $181,000, from $111,200 on October 31, 2001. This increase is due the annual invoice for accounting and insurance expenses that are expensed throughout the year, but invoiced in the first quarter as a prepaid expense. PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2-5 Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Description None (b) Reports on Form 8-K None 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: March 17, 2002 By: /s/ Howard F. Hill ------------------------------ Howard F. Hill, President Chief Executive Officer Dated: March 17, 2002 By: /s/ Terrie A. Gross ------------------------------ Terrie A. Gross Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----