-----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, A4G3Pjgpr2vIpRd76vgq6yOEdG1ALpgtRTvcctAptmZ4xBfjqV2UERRAco/y86AC Cl+9DUA+gH6a5p6K+3QmeQ== 0000740664-99-000016.txt : 19990923 0000740664-99-000016.hdr.sgml : 19990923 ACCESSION NUMBER: 0000740664-99-000016 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990922 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: 99715185 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 31,1999 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 31,1999, the registrant had 3,148,598 shares of Common Stock, $.01 par value, issued and outstanding. Part I. FINANCIAL INFORMATION Item 1: Financial Statements BALANCE SHEET July 31 October 31 1999 1998 ----------- ----------- (Unaudited) (Audited) ASSETS - --------------- CURRENT ASSETS Cash .................................................. $ 986,255 $1,209,143 Investments in available-for-sale securities .......... 2,024,604 1,129,582 Trade accounts receivable less allowance for doubtful accounts of $27,400 & $30,000 ............ 645,651 806,669 Inventories - Note 3 .................................. 2,384,955 2,466,448 Prepaid expenses and deposits ......................... 248,793 244,407 Deferred tax assets ................................... 66,000 66,000 Note receivable from stockholder ...................... 70,000 70,000 ---------- ---------- TOTAL CURRENT ASSETS ............................... 6,426,258 5,992,249 FIXED ASSETS Furniture and office equipment ........................ 152,838 158,628 Equipment and tooling ................................. 510,454 479,880 ---------- ---------- Fixed assets, at cost ............................ 663,292 638,508 Less accumulated depreciation and amortization ........ 521,705 475,734 ---------- ---------- NET FIXED ASSETS ................................. 141,587 162,774 Deferred tax assets ................................... 100,000 100,000 Other assets .......................................... 4,900 4,900 ---------- ---------- TOTAL ASSETS ..................................... $6,672,745 $6,259,923 ========== ========== See Notes to Financial Statements BALANCE SHEET July 31 October 31 1999 1998 ----------- ----------- (Unaudited) (Audited) LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------- CURRENT LIABILITIES Accounts payable .................................. $ 134,572 $ 203,650 Accrued expenses .................................. 298,889 458,670 ----------- ----------- TOTAL CURRENT LIABILITIES .................... 433,461 662,320 STOCKHOLDERS' EQUITY Common Stock - $.01 par value Authorized - 10,000,000 shares Issued & outstanding 3,078,598 shares ........... 31,486 30,786 Capital paid in excess of par value ............... 4,400,868 4,373,868 Retained earnings ................................. 2,110,878 1,524,450 Unearned compensation ............................. (251,095) (331,501) Treasury stock, at cost (29,400 shares) ........... (52,853) 0 ----------- ----------- TOTAL STOCKHOLDERS' EQUITY ................... 6,239,284 5,597,603 ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ...................... $ 6,672,745 $ 6,259,923 =========== =========== See Notes to Financial Statements
STATEMENTS OF OPERATIONS (Unaudited) (Audited) Three Months Ended Nine Months Ended July 31 July 31 ----------------------- ---------------------- 1999 1998 1999 1998 ----------- ---------- -------- --------- Net Sales ........................................ $1,598,851 $1,585,907 $4,421,668 $4,901,897 Cost of Sales .................................... 618,884 783,650 2,028,026 2,404,007 ---------- ---------- ---------- ---------- Gross Profit ................................ 979,967 802,257 2,393,642 2,497,890 ---------- ---------- ---------- ---------- Operating expenses: Engineering ................................. 73,065 110,356 213,564 355,982 Selling and general ......................... 441,912 381,486 1,290,000 1,102,912 ---------- ---------- ---------- ---------- Total ..................................... 514,977 491,842 1,503,564 1,458,894 ---------- ---------- ---------- ---------- Operating income ............................ 464,990 310,415 890,078 1,038,996 Interest income .................................. 31,041 34,502 94,350 81,864 ---------- ---------- ---------- ---------- Income before provision for income tax .............................. 496,031 344,917 984,428 1,120,860 Provision for state & federal income tax .................................. 202,000 138,000 398,000 450,000 ---------- ---------- ---------- ---------- Net income .................................. $ 294,031 $ 206,917 $ 586,428 $ 670,860 ========== ========== ========== ========== Per share data: Basic earnings per share .................... $ 0.10 $ 0.07 $ 0.19 $ 0.22 ========== ========== ========== ========== Diluted earnings per share .................. $ 0.08 $ 0.06 $ 0.16 $ 0.19 ========== ========== ========== ==========
See Notes to Financial Statements STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended July 31 ------------------------- 1999 1998 --------- --------- Net income .......................................... $ 586,428 $ 670,860 Adjustments to reconcile net income to net cash (used in) provided by operations Depreciation and amortization ................... 45,971 32,566 Amortization of unearned compensation ........... 80,406 99,669 Change in assets - (incr) decr: Accounts receivable - trade ................ 161,018 12,472 Inventories ................................ 81,493 (158,107) Other assets ............................... (4,386) 57,623 Change in liabilities - incr (decr): Accounts payable ........................... (69,078) 80,314 Accrued expenses ........................... (159,781) 76,559 ----------- ----------- Net cash provided by operating activities ......... 722,071 871,956 ----------- ----------- INVESTING ACTIVITIES Purchase of available-for-sale securities .... (895,022) (468,422) Capital expenditures ......................... (24,784) (85,012) ----------- ----------- Net cash used in financing activities ................ (919,806) (553,434) ----------- ----------- FINANCING ACTIVITIES Purchase of treasury stock ................. (52,853) 0 Proceeds from exercise of common stock options ............... 27,700 1,400 ----------- ----------- Net cash provided by (used in) financing activities .. (25,153) 1,400 ----------- ----------- Net increase in cash and cash equivalents ........... (222,888) 319,922 Cash and cash equivalents at the beginning of the period ........................ 1,209,143 877,587 ----------- ----------- Cash and cash equivalents at the end of period ...... $ 986,255 $ 1,197,509 =========== =========== 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 the financial position of RF Industries, Ltd. as of July 31,1999 and the results of operations for the three month and nine month periods ended July 31,1999 and 1998. Note 2 - Interim reporting The results of operations for the three month and nine month periods ended July 31,1999 and 1998 are not necessarily indicative of the results to be expected for the remainder of the year. Note 3 - Components of Inventory July 31,1999 -------------- (Unaudited) Raw material and supplies $ 282,000 Finished goods .......... 2,102,955 ---------- TOTAL ................... $2,384,955 Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three Months Ending July 31, 1999 vs. Three Months Ending July 31, 1998 Sales increased $12,944, to $1,598,851 from $1,585,907 in the third quarter of fiscal 1998. Connector Division sales decreased 5% to $1,316,153 compared to $1,391,239 for the same quarter last year. Sales at RF Connector continue to be affected by sluggish market demand. Sales at Neulink increased 45% to $282,803 compared to $194,668 last year. The increase in Neulink sales is due to contracts received earlier in the year. Cost of sales declined $164,766 to $618,884 from $763,650. As a percent of sales, cost of sales declined to 39% of sales, compared to 49% of sales in the same quarter last year. The decline in cost of sales is attributable to increased shipments of higher-margin products during the quarter, including the Company's new Coaxial Cable Assemblies, and higher sales from the Neulink Division. Engineering expenses decreased by $37,291, to $73,065 from $110,356 last year and also declined to 5% of sales from 7% of sales last year. Engineering expenses for Neulink were lower in the quarter, compared to unusually high expenses last year to support development of new wireless modem products. Selling and general expenses increased $60,426, to $441,912 from $381,486 last year, and increased, as a percent of sales, to 28% of sales from 24% of sales last year. This increase is due to increased advertising to promote our products. Interest income declined to $31,041 from $34,502 last year due to lower average interest rates received on the Company's cash investments. Nine Months Ended July 31, 1999 vs. Nine Months Ended July 31, 1998 Net sales decreased 10%, or $480,229, to $4,421,667 from $4,901,897 in the first nine months of fiscal 1998. RF Connectors sales decreased 10% to $3,554,697 from $3,961,022 in the same period last year. Neulink sales were $866,970, down 8% from the same period last year. The decline in sales is attributable to the overall slow-down in the electronic distributor market. Cost of sales declined $375,981 to $2,028,026 from $2,404,007. As a percent of sales, cost of sales declined to 46% of sales compared to 49% of sales in the same quarter last year. The reduction in cost of sales for the period is due to an improved product mix. Engineering expenses decreased 40%, or $142,418, to $213,564 from $355,982 last year. This decrease is due to lower Neulink R&D expenses compared to last year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) Selling and general expenses increased 17%, or $187,088, to $1,290,000 from $1,102,912 for the same period last year. Selling and general expenses increased to 29% of sales compared to 23% for the same period last year. The increase is due to increased advertising and trade show expenses. Interest income increased 15%, or $12,000, to $94,000 from $82,000 due to the company's higher average invested balances. The provision for income taxes declined by $52,000 due to lower net income. The blended tax rate remained at approximately 40% in both nine month periods. Material changes in financial condition: Cash and decreased $222,888 to $986,255 compared to the October 31, 1998 fiscal year balance of $1,209,143. Cash was applied to investments in available for sale securities, which increased by $895,022 to $2,024,604 from $1,129,582. The total of cash and investments increased by $672,134 to $3,010,859 at July 31, 1999 from $2,338,725 at October 31, 1998. Trade accounts receivable declined by $161,018, or 20% to $645,651 compared to the October 31, 1998 balance of $806,669. The decline is due to lower sales in fiscal 1999. Inventories decreased $81,493 to $2,384,955 from $2,466,448 at October 31, 1998, due to lower sales in fiscal 1999. The Company endeavors to maintain inventories which are in balance with customer demand. Prepaid expenses and deposits were essentially unchanged, increasing $4,386 to $248,793 from $244,407. The change is associated with prepayments for inventory. Accounts payable declined by $69,078, or approximately 34% to $134,572 from $203,650 due to the decline in sales and the Company's strong cash position. Accrued expenses declined by $159,781 to $298,889 from $458,670. This is due to a difference in the timing of payments for accrued federal and state taxes. Year 2000 Issue The Year 2000 issue is the result of computer programs using only two digits to identify a year within date fields. Date-sensitive software may recognize a date using "00" as year 1900 rather than the year 2000. Such an error could result in a system failure causing disruptions of operations. The Company is assessing the readiness of its significant suppliers and large customers to determine the extent to which the Company is vulnerable to those third parties' failure to remedy their own year 2000 issues. The Company has updated equipment and does not expect any problems resulting from the Year 2000 issue. However, there can be no guarantee that the systems of other companies will be timely converted, or that a failure to convert by another company would not have a material effect on the Company. The Company has determined that it has no exposure to contingencies related to the Year 2000 issue for the products it has sold. 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, 1999. 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: September 22, 1999 By: Howard F. Hill ------------------------- Howard F. Hill, President Chief Executive Officer Dated: September 22, 1999 By: Terrie A. Gross ------------------------- Terrie A. Gross Chief Financial Officer EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-QSB
5 9-MOS OCT-31-1998 NOV-01-1998 JUL-31-1999 986,255 2,024,604 618,251 27,400 2,384,955 6,426,258 663,292 521,705 6,672,745 231,460 0 0 0 31,486 6,409,799 6,672,745 4,421,668 4,421,668 2,028,026 3,531,590 0 0 (94,350) 984,428 398,000 586,428 0 0 0 586,428 .19 .16
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