-----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, UjBHBaJNjkcfT8O7IJISPljURfnMOUGZ8dvdgProiWqWM/wBl2JHa066jFH4XAhE L+BcBhG0sXLKLD1Ar2hdAQ== 0001019056-00-000065.txt : 20000211 0001019056-00-000065.hdr.sgml : 20000211 ACCESSION NUMBER: 0001019056-00-000065 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOONTON ELECTRONICS CORP CENTRAL INDEX KEY: 0000013191 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 221543137 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-02364 FILM NUMBER: 530252 BUSINESS ADDRESS: STREET 1: 25 EASTMANS RD STREET 2: PO BOX 465 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0465 BUSINESS PHONE: 9733869696 MAIL ADDRESS: STREET 1: 25 EASTMANS RD STREET 2: P O BOX 465 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0465 10QSB 1 FORM 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 BOONTON ELECTRONICS CORPORATION State: New Jersey Identification No. 22-1543137 File No. 0-2364 Address: 25 Eastmans Road, P.O. Box 465, Parsippany, New Jersey 07054-0465 Telephone: 973-386-9696 "Indicate by checkmark 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 [_] Shares Outstanding: December 31, 1999 2,387,332 December 31, 1998 2,387,332
(Unaudited) BOONTON ELECTRONICS CORPORATION BALANCE SHEETS Assets December 31, 1999 September 30, 1999 ------------------ ------------------ Current assets: Cash and cash equivalents $ 86,259 $ 69,484 Trade receivables 930,236 866,475 Inventories 1,467,569 1,441,561 Deferred tax benefit 86,000 86,000 Prepaid expenses and other current assets 288,552 271,945 ------------------ ------------------ Total current assets 2,858,616 2,735,465 ------------------ ------------------ Plant and equipment - net 354,043 375,287 ------------------ ------------------ Other assets: Deferred tax benefit 322,435 322,435 Deposits 70,121 70,121 ------------------ ------------------ Total other assets 392,556 392,556 ------------------ ------------------ Total assets $ 3,605,215 $ 3,503,308 ================== ================== Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Note payable $ 85,946 $ 84,303 Related party loans 43,530 43,530 Accounts payable - trade 1,076,701 1,082,132 Other current liabilities 322,479 298,717 ------------------ ------------------ Total current liabilities 1,528,656 1,508,682 Note payable - noncurrent 215,932 234,849 Related party loans - noncurrent 218,970 218,970 ------------------ ------------------ Total liabilities 1,963,558 1,962,501 ------------------ ------------------ Commitments and contingencies Stockholders' equity: Common stock 238,733 238,733 Capital in excess of par 5,005,563 5,005,563 Deficit (3,602,639) (3,703,489) ------------------ ------------------ Total stockholders' equity 1,641,657 1,540,807 ------------------ ------------------ Total liabilities and stockholders' equity $ 3,605,215 $ 3,503,308 ================== ==================
The accompanying notes are an integral part of these statements. 2 (Unaudited) BOONTON ELECTRONICS CORPORATION STATEMENTS OF OPERATIONS For the Three Months Ended December 31, 1999 December 31, 1998 ------------------ ------------------ Net sales $ 1,771,323 $ 1,507,840 Cost of goods sold 909,826 875,998 ------------------ ------------------ Gross profit 861,497 631,842 ------------------ ------------------ Operating expenses: Commissions 226,693 136,098 Research and development 174,004 234,534 Other operating expenses 368,641 357,270 ------------------ ------------------ Total operating expenses 769,338 727,902 ------------------ ------------------ Income (loss) from operations 92,159 (96,060) ------------------ ------------------ Interest expense 9,830 14,487 Other (income) expense (18,521) 11,962 ------------------ ------------------ Total other (income) expense (8,691) 26,449 ------------------ ------------------ Income (loss) before taxes 100,850 (122,509) Income taxes -- -- ------------------ ------------------ Net income (loss) 100,850 (122,509) Stockholders' equity - beginning 1,540,807 2,617,255 Common stock sold -- 442,000 ------------------ ------------------ Stockholders' equity - ending $ 1,641,657 $ 2,936,746 ================== ================== Weighted average shares outstanding 2,387,332 2,243,775 ================== ================== Earnings (loss) per share $ 0.04 $ (0.05) ================== ================== The accompanying notes are an integral part of these statements. 3
(Unaudited) BOONTON ELECTRONICS CORPORATION STATEMENTS OF CASH FLOWS For the Three Months Ended December 31, 1999 December 31, 1998 ----------------- ----------------- Cash provided (used) by operations: Net income (loss) $ 100,850 $ (122,509) Adjustments to reconcile net income (loss): Depreciation 21,244 21,929 Gain on sale of assets -- (150) Decrease (increase) in current assets: Accounts receivable (63,761) 454,688 Inventories (26,008) (97,816) Prepaid expenses and other current assets (16,607) (123,770) Increase (decrease) in current liabilities: Accounts payable (5,431) (177,408) Accrued liabilities 23,762 (293,537) Chapter 11 settlement - current -- (144,993) ---------------- ---------------- Net cash provided (used) by operations 34,049 (483,566) ---------------- ---------------- Cash provided (used) by investing activities: Purchase of equipment -- (3,010) Proceeds from sale assets -- 150 ---------------- ---------------- Net cash provided (used) by investing activities -- (2,860) ---------------- ---------------- Cash provided (used) by financing activities: Payments on loans (17,274) (21,957) Proceeds from sale of common stock -- 442,000 ---------------- ---------------- Net cash provided (used) by financing activities (17,274) 420,043 ---------------- ---------------- Increase (decrease) in cash and cash equivalents 16,775 (66,383) Cash and cash equivalents at beginning of period 69,484 113,812 ---------------- ---------------- Cash and cash equivalents at end of period $ 86,259 $ 47,429 ================ ================
The accompanying notes are an integral part of these statements. 4 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS: A. The Company is a New Jersey Corporation organized in 1947. The Company designs and produces electronic testing and measuring instruments including power meters, voltmeters and modulation meters. Recent models are microprocessor controlled and are often used in computerized automatic testing systems. The Company's equipment is marketed throughout the world to commercial and government customers in the electronics industry. The Company markets and distributes its products throughout the United States and abroad via domestic sales representatives and foreign distributors. Representatives sell on a commission basis, while distributors buy products for resale at discounted ex-factory prices. Its representatives and distributors also handle the products of other manufacturers, although these are not generally competitive with the Company's products. B. Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. C. The Company accounts for uncollectible trade accounts under the direct write-off method whereas generally accepted accounting principles require provision for such expenses under the allowance method. The effect of using this method approximates the allowance method as all amounts are deemed to be fully collectible. D. Inventories - stated at the lower of cost or market are valued by the first-in, first-out (FIFO) method. E. Plant and equipment - Depreciation and amortization are calculated by the straight-line method for financial reporting purposes at rates based on the following estimated useful lives: Building and improvement 39 Machinery and equipment 5-10 Office furniture and fixtures 5-10 5 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 The accelerated cost recovery and modified accelerated cost recovery systems are used for income tax purposes. Cost of major renewals and improvements that extend the life of the plant and equipment are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. F. Financial risk - The Company regularly maintains bank account balances in excess of FDIC insurable limits. G. Income taxes - The Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" that requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in a company's financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on differences between the financial statement amounts and tax basis of assets and liabilities using expected tax rates in effect in the years in which the differences are expected to reverse. The Company recognized the benefit of net operating loss carry forward applying the valuation allowance that requires that the tax benefit be limited based on the weight of available evidence and the probability that some portion of the deferred tax asset shall not be realized. H. Financial instruments - The Company's financial instruments include cash, cash equivalents, trade receivables and payables, long-term debt and loans from related parties for which the carrying amounts approximate fair value. It is not practicable to estimate the fair value of related party loans and long-term debt. I. Stock-based compensation - The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB25) and related interpretations in accounting for its employee stock options. Under APB25, because the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. Effective October 1, 1997, the Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (Statement 123). 6
(Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 2 - INVENTORIES: December 31, 1999 September 30, 1999 ----------------- ------------------ Raw material $ 826,444 $ 846,594 Work in process 329,434 326,332 Finished goods 311,691 268,635 ----------------- ----------------- Total inventories $ 1,467,569 $ 1,441,561 ================= ================= NOTE 3 - PLANT AND EQUIPMENT: December 31, 1999 September 30, 1999 ----------------- ------------------ Building and improvements $ 62,329 $ 62,329 Machinery and equipment 1,675,512 1,675,512 Office furniture and fixtures 583,232 583,232 ----------------- ----------------- Total - at cost 2,321,073 2,321,073 Accumulated depreciation (1,967,030) (1,945,786) ----------------- ----------------- Plant and equipment - net $ 354,043 $ 375,287 ================= ================= NOTE 4 - NOTES PAYABLE: December 31, 1999 September 30, 1999 ----------------- ------------------ A. Board of Directors: Notes, subordinated to NJEDA loan, dated February 6, 1995, payable in monthly installments of $5,449 including interest at 9% per annum through September 30, 2001 $ 262,500 $ 262,500 Less current portion 43,530 43,530 ----------------- ----------------- Non current portion $ 218,970 $ 218,970 ================= =================
Interest expense for the fiscal years ended September 30, 1999 and 1998 amounted to $23,953 and $24,035, respectively. No principal payments were made during the year ended September 30, 1999 since these notes are subordinated to the NJEDA loan. 7 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 December 31, 1999 September 30, 1999 ----------------- ------------------ B. New Jersey Economic Development Authority: Note, dated July 31, 1996, payable in monthly installments of $7,620 including interest at 6.75% per annum through June 30, 2003: $ 301,878 $ 319,152 Less current portion 85,946 84,303 -------------- ------------- Non current portion $ 215,932 $ 234,849 ============== ============= Interest expense for the fiscal years ended September 30, 1999 and 19998 amounted to $24,855 and $28,061, respectively. Future principal payments under the terms of the agreement are as follows: Fiscal year Amount ----------- ----------- 2000 $ 84,303 2001 77,778 2002 83,271 2003 73,800 ----------- Total $ 319,152 =========== NOTE 5 - CONCENTRATION OF CREDIT RISK: The Company maintains cash and cash equivalents at three financial institutions that are insured by the Federal Deposit Insurance Corporation (FDIC) and/or the Securities Investor Protection Corporation (SIPC). The Company at times during the period had amounts in these institutions that exceeded insurable limits of $100,000 FDIC and $500,000 SIPC. In the normal course of business the Company extends unsecured credit to customers in the United States and abroad. 8 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 6 - COMMITMENTS AND CONTINGENCIES: Commitments: A. Retirement Plans: Effective July 1, 1989, the Company adopted a defined contribution plan for all eligible employees. In accordance with Internal Revenue Code Section 401(k), the plan provides for elective deferral of up to 15% of total compensation. The plan further provided for a Company matching contribution of 25% of the elective deferral amount of each participant that did not exceed 6% of total compensation. Effective October 1, 1995, the Company increased the matching contribution to 50% of the elective deferral amount of each participant that does not exceed 6% of total compensation. The amounts charged to operations for the fiscal years ended September 30, 1999 and 1998 were $32,854 and $33,792, respectively. B. Employee Stock Option Plans: On February 26, 1987, the Stockholders approved the 1987 incentive Stock Option Plan, the 1987 Employee Stock Purchase Plan and the 1987 Stock Option Plan for Non-Employee Directors. Subject to the provisions of these plans, an aggregate of 150,000 shares of the Company's stock was made available for option purchases; namely 75,000 shares, 37,500 shares and 37,500 shares, respectively. The plans ended effective December 1996 and no further grants may be made for options.
Price per share Number of shares --------------- ---------------- Shares under option at September 30, 1996 $ 1.0625 46,500 Expired $ 1.0625 (20,000) --------- Shares under option at September 30, 1997 $ 1.0625 26,500 ========= Shares under option at September 30, 1998 $ 1.0625 26,500 Expired $ 1.0625 (14,000) --------- Shares under option at September 30, 1999 $ 1.0625 12,500 =========
C. Lease commitments: Effective September 28, 1994, the Company entered into a seven-year lease (with a five-year renewal option) for its present office and manufacturing facility in Hanover Township, New Jersey. Rent that was charged to operations for the fiscal year ended September 30, 1999 totaled $332,000. Future minimum lease payments required under the lease for fiscal years 2000 and 2001 are $332,000 and $332,000, respectively. 9 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 The Company leases certain equipment under operating lease arrangements that are generally 60-month terms. These operating leases expire in various years through 2005. One of these leases may be renewed at the end of three years. Future minimum payments consisted of the following at September 30, 1999: Fiscal Year Amount ----------- ----------- 2000 $ 52,186 2001 54,624 2002 51,511 2003 49,287 2004 44,536 2005 2,438 Contingencies: A. Environmental Contingencies: Follow an investigation by the New Jersey Department of Environmental Protection (NJDEP) of the Company's waste disposal practices at a certain site that it formerly leased, the Company put a groundwater management plan into effect as approved by the NJDEP. Costs associated with the plan are charged directly to income as incurred. The owner of the site has notified the Company that if the NJDEP investigation proves to interfere with a sale of the property, the owner may seek to hold the Company liable for any loss it suffers as a result. However, corporate counsel has informed management that, in their opinion, the lessor would not prevail in any lawsuit filed due to the imposition by law of the statute of limitations. Costs charged to operations in connection with the groundwater management plan for the fiscal years ended September 30, 1999 and 1998 amounted to $79,855 and $57,205, respectively. The Company estimates the expenditures in this regard for the fiscal year ending September 30, 2000 shall amount to approximately $80,000. B. Income Tax Contingencies: The Company's income tax returns for the fiscal years ended September 30, 1999, 1998, 1997 and 1996 are subject to review. C. The Company remains liable for certain claims by a former stockholder until full payment of the Stock Purchase by an affiliated company. D. A former employee has charged the Company with wrongful dismissal. The Company contends there was no such discrimination and intends to contest the suit. 10 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 Contingencies - continued: E. In September 1999, the Company was a party to an Agreement and Plan of Reorganization. In October 1999, the Purchasers terminated the Agreement pursuant to specific conditions. The Agreement provided that should the Company or its Shareholders enter into any acquisition Transaction involving a third party within one year after such termination, the Company would be obligated to pay the Purchasers $100,000 plus certain other expenses up to a maximum of $500,000. Management contends that any such claim would be without merit and would vigorously defend their position. F. Management intends to pursue business alternatives including a strategic- alliance, merger or sale of the Company. NOTE 7 - COMMON STOCK:
December 31, 1999 September 30, 1999 ------------------ ------------------ Common Stock: $.10 par value authorized 5,000,000 shares, Issued and outstanding 2,387,332 shares $ 238,733 $ 238,733 ================== ================== NOTE 8 - INCOME TAXES: The components of the deferred tax asset are: December 31, 1999 September 30, 1999 ------------------ ------------------ Deferred tax asset $ 3,029,700 $ 3,029,700 Valuation allowance (2,621,265) (2,621,265) ------------------ ------------------ Net deferred tax asset $ 408,435 $ 408,435 ================== ==================
Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes", requires that the Company record a valuation allowance when it is "more likely than not that some portion or all of the deferred tax assets will not be realized". The ultimate realization of this deferred tax asset depends on the ability to generate sufficient taxable income in the future. The Company has undergone substantial restructuring changes and has made strategic realignments of its operations that management believes will result in future profitability. The losses in recent years and a desire to be conservative make it appropriate to record a valuation allowance. Accordingly, the Company has provided a valuation allowance for the portion of the total deferred tax asset that will not be realized as related to the operating loss carry forward. 11 (Unaudited) BOONTON ELECTRONICS CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 Income tax laws allow for the utilization of loss carry forwards over periods not to exceed 15 and 7 years for Federal and State purposes, respectively. In the event the Company reports sufficient profitability in the future to use all or a portion of the deferred tax asset the valuation allowance shall be reduced or eliminated through a credit to expense (thereby increasing stockholders' equity). The Company has net loss carry forwards for Federal and State purposes approximating $6,706,500 and $8,327,500 that expire in various years through 2014 and 2006, respectively. These loss carry forwards can be utilized to reduce future taxable income dollar for dollar. The following is a reconciliation of income taxes at the federal statutory rate with income taxes recorded by the Company:
December 31, 1999 December 31, 1998 ----------------- ----------------- Computed income taxes at statutory rate $ 31,203 $ -- Recognition of net operating loss (31,203) -- --------------- --------------- Expense (benefit) $ -- $ -- =============== ===============
NOTE 9 - SEGMENT INFORMATION: The Company is engaged in the manufacture and sale of electronic test and measurement equipment and management considers its business as a single segment for reporting purposes. The Companies export sales were as follows: Three Months Ended December 31, Amount % of Total Sales ------------------------------- ---------- ---------------- 1999 $ 768,830 43% 1998 595,136 39% The Companies sales to domestic government agencies were as follows: Three Months Ended December 31, Amount % of Total Sales ------------------------------- ---------- ---------------- 1999 $ 41,040 2% 1998 195,947 13% NOTE 10 - EARNINGS PER SHARE: Earnings per share have been computed by dividing net income by the weighted-average number of shares outstanding of 2,387,332 for 1999 and 2,243,775 for 1998. Options to purchase a total of 428,268 shares of common stock at $3.24 per share in 1998 were not included because the exercise price exceeded the average market price and would have therefore resulted in anti-dilution. Incentive stock option shares were not included because they were insignificant. 12 BOONTON ELECTRONICS CORPORATION MANAGEMENT DISCUSSION AND ANALYSIS OF STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 Net sales for the three months ended December 31, 1999 at $1,771,323 were $263,483 higher than net sales of $1,507,840 reported for the three months ended December 31, 1998. Domestic revenues increased by $89,789 and export revenues increased by $173,694. The primary reason for the increase in reported revenues was the successful launch of the Company's new product. Gross profit as a percentage of net sales increased to 48.6% in the current period versus 41.9% a year ago. The increase was directly related to the increased revenues coupled with the positive benefit resulting from cost reduction programs instituted during fiscal year 1999. Commission expense increased by $90,595 over the prior year's comparable period. The increase was due to the increase in export revenues that carry a higher commission rate than domestic revenues. Research and development expense decreased by $60,530 due to completion of the new product design by the end of the 1999 fiscal year. Income from operations of $92,159 was reported for the three months ended December 31, 1999 as compared to a loss from operations of $96,060 the previous year. Net income of $100,850 was a $223,359 increase over the prior year's net loss of $122,509. Earnings per share were $.04 versus a loss per share of $.05 the prior year. Trade receivables were up slightly as a result of the increased revenues. Inventory also increased slightly to $1,467,569 and continues to include a reserve for obsolescence of approximately $212,000. The current ratio at December 31, 1999 improved to 1.87 as compared to 1.81 at September 30, 1999 and working capital increased to $1,329,960 at December 31, 1999 versus $1,226,783 at September 30, 1999. The Company's backlog at December 31, 1999 was $2,358,977 reflecting an increase of $1,301,231 over the September 30, 1999 backlog and an increase of $511,750 over the December 31, 1998 backlog. The increase was primarily due to a $1,112,320 order placed in December 1999 for 8701 VXI Modulation Meters. 13 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. BOONTON ELECTRONICS CORPORATION By/s/ YVES GUYOMAR --------------------------------------- Yves Guyomar, President and Chief Executive Officer and Principal Accounting Officer February 9, 2000 14 BOONTON ELECTRONICS CORPORATION INDEX TO EXHIBITS FILED IN THE QUARTERLY REPORT ON FORM 10-QSB FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 Exhibit No. Page - ----------- ---- 27 Financial Data Sheet 16 15 EX-27 2 FDS
5 0000013191 Boonton Electronics Corporation 1 USD 3-MOS SEP-30-2000 OCT-01-1999 DEC-31-1999 1 86,259 0 930,236 0 1,467,569 2,858,616 2,321,073 1,967,030 3,605,215 1,528,656 0 0 0 238,733 1,402,924 3,605,215 1,771,323 1,771,323 909,826 769,338 (18,521) 0 9,830 100,850 0 100,850 0 0 0 100,850 .04 .04
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