<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000.
Commission File Number 0-27996
WIRELESS XCESSORIES GROUP, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3835420
-------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1840 COUNTY LINE ROAD
HUNTINGDON VALLEY, PA 19006
(Address of principal executive offices)
(215) 494-0111
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
As of May 9, 2000, there were 5,222,080 shares of the registrant's Common Stock,
par value $.001 per share, outstanding.
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WIRELESS XCESSORIES GROUP, INC.
FORM 10-Q FOR THE PERIOD ENDED MARCH 31,2000
INDEX
-----
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheet March 31, 2000 (unaudited)
and December 31, 1999 ...........................................3
Consolidated Statements of Operations for the three months ended
March 31, 2000 (unaudited) and 1999 (unaudited)....................4
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 (unaudited) and 1999 (unaudited) .............5
Notes to Consolidated Financial Statements .......................6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................8
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk ...............................................10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K ................................11
2
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PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WIRELESS XCESSORIES GROUP, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, 1999 March 31, 2000
----------------- --------------
ASSETS (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $366 $504
Accounts receivable (net of allowance of
$120 and $162, respectively) 5,119 4,225
Inventories 5,204 5,265
Prepaid expenses and other current assets 188 212
Income tax refund receivable 587 68
Current deferred income taxes 379 379
Net current assets held for sale 1,985 726
------- -------
Total Current Assets 13,828 11,379
PROPERTY AND EQUIPMENT - Net 999 1,208
EXCESS OF COST OVER NET ASSETS
ACQUIRED (Net of accumulated amortization of $111 and $121,
respectively) 949 939
NET NONCURRENT ASSETS HELD FOR SALE 737 537
OTHER ASSETS 172 670
------- -------
TOTAL ASSETS $16,685 $14,733
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $600 $600
Bank overdraft 344 310
Accounts payable 1,000 811
Accrued payroll and related benefits 1,014 965
Other accrued expense 1,504 1,323
------- -------
Total Current Liabilities 4,462 4,009
------- -------
LONG-TERM DEBT: 5,505 3,826
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.001, 1,000,000 shares -- --
authorized, no shares issued or outstanding
Common Stock, par value $.001, 10,000,000 shares authorized,
4,743,000 and 5,137,080 shares, issued and outstanding,
respectively 5 5
Additional paid-in capital 11,204 11,210
Accumulated Deficit (4,491) (4,317)
------- -------
Total Stockholders' Equity 6,718 6,898
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,685 $14,733
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
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WIRELESS XCESSORIES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31, 1999 March 31, 2000
-------------- --------------
<S> <C> <C>
NET SALES $6,146 $7,137
COST OF SALES 2,940 3,560
----- -----
Gross profit 3,206 3,577
SELLING, GENERAL AND ADMINISRATIVE EXPENSES 2,342 3,194
INTEREST EXPENSE, net 104 77
--- --
Income from continuing operations before income taxes 760 306
INCOME TAX EXPENSE 350 132
--- ---
Net income from continuing operations 410 174
LOSS FROM DISCONTINUED OPERATIONS (net of tax benefit of
$204 and $0, respectively) (260) -
--- ---
Net income $150 $174
==== ====
Earning (loss) per common share - Basic and Diluted:
Income from continuing operations $.09 $.03
Income (loss) from discontinued operations (.06) -
---- ---
Net income per common share $.03 $.03
==== ====
Basic weighted average common shares outstanding 4,743,000 5,133,282
========= =========
Diluted weighted average common shares outstanding 4,753,677 5,222,083
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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WIRELESS XCESSORIES GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31, 1999 March 31, 2000
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $150 $174
Adjustments to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization 199 162
Allowance for doubtful accounts provision 86 53
Change in Assets and Liabilities, net of effects from sale of
Tauber Electronics
Income tax refunds -- 519
Accounts receivable 423 1,219
Inventories (284) 219
Prepaid expenses and other assets (68) (34)
Accounts payable and accrued expenses 311 (1,170)
------ ------
Net cash provided by operating activities 817 1,142
------ ------
INVESTING ACTIVITIES:
Purchase of property and equipment (122) (337)
Net cash proceeds from sale of Tauber assets -- 1,005
------ ------
Net Cash (used in) provided by investing activities (122) 668
------ ------
FINANCING ACTIVITIES:
Borrowings under Loan Facility (619) (1,678)
Issuance of common stock for options -- 6
------ ------
Net cash used in financing activities (619) (1,672)
------ ------
NET INCREASE IN CASH AND CASH EQUIVALENTS 76 138
------ ------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 330 366
------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD: $406 $504
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for-
Interest $167 $113
======= =======
Income taxes $62 $303
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
5
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WIRELESS XCESSORIES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The condensed financial statements included herein have been prepared by
Wireless Xcessories Group, Inc. (the "Company") without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These statements
include all adjustments that, in the opinion of management, are necessary to
provide a fair statement of the results for the periods covered. All such
adjustments are of a normal recurring nature. These financial statements should
be read in conjunction with the audited financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. The results of operations for the interim periods presented
are not necessarily indicative of the results for the full year.
2. DISCONTINUED OPERATIONS
On January 27, 2000, the Company sold substantially all of the assets and
transferred certain liabilities of its wholly owned subsidiary, Tauber
Electronics, Inc. ("Tauber"). As consideration for the sale, the Company
received a cash payment of $1,005,854 on February 1, 2000 and a note in the
amount of $519,708 due in 2005 with interest payments beginning upon the closing
of the transactions and principal payments commencing during the first quarter
of 2002. The principal amount of this note was subsequently reduced to $483,573,
effective on March 15, 2000, to reflect the final valuation of transferred
assets. The note is subject to further adjustment (only upward) during the first
quarter of 2001 based on the valuation of certain inventory reserves. In
addition, the Company has developed a plan, which has been approved by the Board
of Directors of the Company, to dispose of Battery Network, Inc. The Company
intends to, but cannot guarantee that it will, complete this disposition during
calendar year 2000. As these two companies represent all of the Company's
remaining businesses within its battery assembly and distribution segment (the
"Battery Segment"), the Company has accounted for this segment as discontinued
operations.
The results of operations for the Battery Segment have been classified as
discontinued operations for all periods presented in the consolidated statements
of operations and balance sheets. The assets and liabilities of the discontinued
operations have been classified in the accompanying consolidated balance sheets
as "Net current assets held for sale" and "Net noncurrent assets held for sale."
Discontinued operations have not been segregated in the accompanying
consolidated statements of cash flows, and, therefore, amounts of certain
captions will not agree with the respective consolidated statements of
operations. Net sales for the Battery Segment were $1,508,782 and $4,894,000 for
the quarters ended March 31, 2000 and 1999, respectively.
The Company allocated interest not specifically associated with any segment
based upon a ratio of net tangible assets. Interest expense allocated to
discontinued operations was $72,000 and $27,000 for the quarters ended March 31,
1999 and 2000, respectively.
3. LOAN FACILITY
The Company entered into a Revolving Credit, Term Loan and Security
Agreement, dated January 6, 1997, as subsequently amended March 30, 2000, (the
"Loan Facility"), with IBJ Whitehall-Financial Group (formerly known as IBJ
Schroder Bank and Trust Company), as agent ("IBJ").
The Loan Facility consists of a $3,000,000 Term Loan (the "Term Loan")
payable in 35 monthly installments of $50,000 each with the balance to be paid
at maturity and a Revolving Credit Facility (the "Revolver Loan") of up to
$10,000,000 to be advanced at the rate of 80% of eligible accounts receivable
and 50% of inventories. The Revolver Loan bears interest at the rate of 1/4 of
1% plus the higher of (i) the base commercial lending rate of IBJ or (ii) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers plus 1/4
of 1%, or, at the option of the Company at
6
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the Eurodollar rate plus 2%. The Eurodollar rate is defined as LIBOR for a
designated period divided by one less the aggregate reserve requirements. The
interest on the Term Loan is 1/2% higher than the interest rate on the Revolver
Loan. The Loan Facility is secured by a pledge of the assets of the borrowers
and a pledge of the outstanding capital stock of the subsidiaries of the
Company. As of March 31, 2000, the principal amount outstanding of the Term Loan
was $740,000 and the Revolver Loan was $3,686,000. The Loan Facility contains
certain covenants, which include maintenance of certain financial ratios,
maintenance of certain amounts of working capital, and net worth as well as
other affirmative and negative covenants. It also prohibits the payment of
dividends of common stock without consent. At December 31, 1999, the Company was
not in compliance with certain of these covenants. On March 30, 2000 the Company
entered into an amendment to the Loan Facility, whereby the non-compliance at
December 31, 1999 was waived, and the financial covenants through December 31,
2001 were amended to reflect the Company's current projections. As of March 31,
2000, the Company was in compliance with these covenants. The Loan Facility is
due to expire on January 7, 2002.
4. MANAGEMENT AGREEMENT
In February 1998, the Management Agreement with Founders Management
Services, Inc. ("Founders") was revised by mutual consent to, among other
things, eliminate the origination and incentive fee provisions of the original
agreement. On May 5, 1998, both active principals of Founders resigned as
officers and directors of the Company, effectively terminating the relationship
between the Company and Founders. In December 1999, Founders filed a lawsuit in
the United States District Court for the Southern District of New York against
the Company alleging the Company owed Founders the amount of approximately
$493,000 for a purportedly improper termination of the Management Agreement. The
Company believes its early termination of the agreement was proper and therefore
believes that the alleged amount claimed is not due to Founders. In addition,
the Company has asserted counterclaims related to Founders' services under the
Management Agreement.
5. PRIVATE PLACEMENT
On April 23, 1999, the Company raised $498,800 (net of costs of $10,434)
through a private placement of 389,732 shares of its common stock to two of its
Board Members Christopher F. McConnell, Board Chairman, and Barbara M. Henagan
and to one other related party as part of up to a 500,000 share private offering
exclusively to directors, officers and related parties.
6. SEGMENT DISCLOSURE
As a result of decision to exit the Battery Segment, the Company
effectively operates in one business segment, referred to as the Wireless
Products Segment, which distributes cellular telephone accessory products
including batteries, chargers and antennas throughout North and South America.
The Wireless Products Segment is headquartered in Huntingdon Valley,
Pennsylvania and consists of Advanced Fox Antenna, Cliffco of Tampa Bay, Inc.
and AccessorySolutions.com, Inc. All revenue and essentially all long-lived
assets were related to operations in the United States as of March 31, 2000 and
for the quarters ended March 31,1999 and 2000.
Export sales for the three months ended March 31, 1999 and 2000 were as
follows:
(In Thousands)
1999 2000
---- ----
Europe, Middle East & Africa $7 $29
Asia and Pacific 1 1
Americas excluding United States 119 158
--- ---
Total Export Sales $127 $188
==== ====
Receivables from export sales at March 31, 2000 and 1999 were $198,573 and
$224,926, respectively.
7. EARNINGS PER SHARE
The Company follows the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings per Share." Earnings applicable to common stock
and common shares utilized in the calculation of basic and diluted earnings
per share ("EPS") are as follows:
Three Months Ended
March 31, March 31,
1999 2000
---- ----
Earnings:
Net income from continuing operations $ 410,000 $ 174,000
========== ==========
Shares:
Weighted average number of common shares
outstanding used in basic earnings per share
calculation 4,743,000 5,133,282
Dilutive effect of stock options and warrants 10,677 88,801
---------- ---------
Total shares used in diluted earnings per
share calculation 4,753,677 5,222,083
========== =========
Basic and Diluted earnings per common share $ 0.09 $ 0.03
========== =========
Options to purchase 219,445 and 31,793 shares with exercise prices ranging
from $1.38 to $5.00 and warrants to purchase 2,400,000 and 2,400,000 shares with
exercise prices ranging from $4.13 to $5.00 were outstanding as of March 31,
1999 and March 31, 2000, respectively, but were not included in the computation
of diluted EPS because the exercise price of the options and warrants was
greater than the average market price of the common shares.
As described in footnote 5, on April 23, 1999, the Company issued 389,732
common shares to two of its Board members and one other related party. This
transaction would decrease the first quarter 1999 earnings per share by $.01 per
common share.
In the last week of April 2000, a former Board member exercised stock
options for 85,000 common shares. This transaction would have had no effect on
earnings per share reported for the period ended March 31, 2000.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS:
The following table represents the Company's statement of operations data
expressed as a percentage of net sales for the respective periods:
Three Months Ended
1999 2000
---- ----
Net Sales 100.0% 100.0%
Cost of Sales 47.8 49.9
---- ----
Gross Profit 52.2 50.1
---- ----
Selling, General &
Administrative Expenses 38.1 44.7
Interest Expense, net 1.7 1.1
--- ---
Income from continuing operations
before income taxes 12.4 4.3
---- ---
Income Tax Expense 5.7 1.8
--- ---
Net income from continuing operations 6.7 2.5
Loss from discontinued operations
(net of tax benefit) (4.8) 0.0
----- ---
Net Income 2.4% 2.5%
==== ====
Three Months Ended March 31, 2000 ("2000") Compared to Three Months ended
March 31, 1999 ("1999").
Net sales increased by $1.0 million or 16%, from $6.1 million in 1999 to
$7.1 million in 2000. The increase in sales is mainly attributable to Advanced
Fox who registered an increase of approximately $860,000 or 19% over the same
period in 1999. Advanced Fox achieved this increase by continuing its expansion
of its customer base through aggressive selling and marketing strategies, which
resulted in higher product sales volume. In addition, AccessorySolutions.com,
Inc. contributed approximately $160,000 of sales for the current quarter (its
business started up late in the third quarter of 1999), while Cliffco's net
sales in 2000 were largely unchanged compared to its net sales in 1999.
Gross profit increased by $0.4 million from $3.2 million in 1999 to $3.6
million in 2000 and gross profit as a percentage of sales decreased from 52.2%
to 50.1%. The decrease in gross profit percentage was a result of added expenses
due to more incentives given to customers in the form of expanded volume
incentives and more specialized and customized services to attract new customers
and expand current business to offset lower average unit selling prices and
aggressive competition.
Selling, general and administrative (SG&A) expenses increased from
$2,342,000 in 1999 to $3,194,000 in 2000. As a percentage of sales, SG&A
expenses increased from 38.1% in 1999 to 44.7% in 2000. The increase in SG&A was
attributable to costs of $193,000 at AccesorySolutions.com in 2000 and an
increase of approximately $600,000 at Advanced Fox in marketing, selling, and
distribution costs to support the current and anticipated sales growth. The
increase at Advanced Fox was due primarily to:
- Occupancy costs due to the continued expansion of the Advanced Fox main
distribution facility to handle substantially higher volume. Shipping
volume in terms of both units and number of packages is rising at a
much higher comparative percentage than the Company's overall sales
rate due to lower average sales per unit and changes in customer sales
mix.
- The engagement of additional labor to handle increased customized
packaging and labeling and sharply increased unit growth and to
accommodate changes in the Company's customer needs and product mix.
- Additional information systems and other professional costs to plan and
implement upgrades to
8
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our information technology infrastructure and business systems in
conjunction with the planned automation of our packaging, shipping,
picking and receiving processes.
Interest expenses decreased from $104,000 in 1999 to $77,000 in 2000 due
primarily to decreased borrowings under the Company's Loan Facility resulting
from the sale of 389,732 shares of common stock in April, 1999, the sale of
Tauber in January, 2000, and cash provided from operations.
The Company's effective income tax rate in 2000 is 43.1%. The Company's
effective income tax rate in 1999 was 46.1%. The difference in tax rate is
attributable to the effect of state income expense in the various states in
which the entity operates.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's requirement for capital is to fund (i) sales growth and (ii)
financing for acquisitions. Among other things, the funding of sales growth will
involve capital equipment expenditures related to: (a) business system upgrades,
(b) warehouse and office facility upgrades and expansion, and (c) purchase of
machinery and equipment in order to streamline receiving, shipping, and
packaging operations. Future sales growth will also necessitate further
investment in the development and enhancement of the Company's Web site and
supporting systems. The Company's primary sources of financing during the twelve
months ending March 31, 2000 were cash flow from operations, the sale of 389,732
shares of common stock in April, 1999, the sale of Tauber in January, 2000 and
bank borrowings.
The Company's working capital as of March 31, 2000 was $7,370,000. Net cash
provided by operating activities for the three months ended March 31, 2000 and
1999 was $1,142,000 and $817,000, respectively. The Company was able to provide
cash from operations of $389,000 from its net income of $174,000 as adjusted for
non-cash items of depreciation and amortization of $162,000 and bad debt
provision of $53,000. Cash provided from changes in assets and liabilities
totaled $753,000 resulting from collections of income tax refunds of $519,000
and net decreases in accounts receivable of $1,219,000 and inventory of $219,000
less a decrease in accounts payable and accrued expenses of $1,170,000 and an
increase in prepaid expenses of $34,000.
Net cash provided by investing activities for the three months ended March
31, 2000 was $668,000 from gross cash proceeds of approximately $1,005,000 from
the sale of substantially all of the assets of Tauber in January, 2000 partially
offset by the purchase of property and equipment in the amount of $337,000. Net
cash used in investing activities for the three months ended March 31, 1999 was
$122,000, for the purchase of property and equipment.
Cash used in financing activities for the three months ended March 31, 2000
was principally for $1,528,000 net payments under the Revolver Loan and $150,000
under the Term Loan. Cash used by financing activities for the three months
ended March 31, 1999 was for $469,000 net payments under the Revolver Loan and
$150,000 under the Term Loan. The Company had cash and cash equivalents of
approximately $504,000 on March 31, 2000.
The Loan Facility contains covenants that include maintenance of certain
financial ratios, maintenance of certain amounts of working capital and net
worth as well as other affirmative and negative covenants. At December 31, 1999,
the Company was not in compliance with certain of these covenants. On March 30,
2000, the Company entered into an amended credit agreement whereby the
non-compliance at December 31, 1999 was waived, the Loan Facility was extended
for an additional one year period to January 7, 2002, and new financial
covenants were negotiated through December 31, 2001, which reflect the Company's
current projections. As of March 31, 2000, the Company was in compliance with
these covenants.
The Company estimates that it will incur capital expenditures of
approximately $1,200,000 during the twelve months ended March 31, 2001,
principally for the procurement of a new computer system and the software to
upgrade the Company's business systems and to purchase machinery and equipment
to enhance its warehousing, distribution and assembly operations.
9
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Based upon its present plans, management believes that operating cash flow,
available cash and available credit resources will be adequate to make the
repayments of indebtedness described herein, and meet the working capital cash
needs of the Company and anticipated capital expenditure needs during the twelve
months ending March 31, 2001.
YEAR 2000 ISSUES
The Company identified its various applications and hardware that required
modification or replacement to be year 2000 ("Y2K") compliant. In addition, the
Company contacted its vendors and significant customers regarding their Y2K
compliance plans. Y2K introduced the potential for errors and miscalculations
related to IT and non-IT systems, which were not designed to accommodate a date
of year 2000 and beyond. As of May 12, 2000, the Company had encountered no
significant Y2K-related problems.
The Company incurred costs related to Y2K for outside consultants and
capital expenditures in 1999, 1998 and 1997, which aggregated approximately
$466,000 of which $256,000 related to the Wireless Products Segment. The Company
did not separately track the internal costs for the Y2K project. This cost is
principally the payroll costs for the information systems department.
The most significant remaining risk to the Company regarding Y2K would be
the interruption of business due to vendor and customer non-compliance. As the
Company has not experienced any major problems to date related to Y2K, it does
not have a contingency plan. However, in the event that the Company develops
future problems, the failure to have a contingency plan could have a material
adverse effect on the Company.
SEASONALITY AND INFLATION
Our quarterly operating results have fluctuated only to a limited extent in
the past. However, with the discontinuation of the Battery Segment, it is likely
that they will fluctuate significantly in the future with lower product revenues
in the first and second quarters as compared with the third and fourth quarters.
This fluctuation is due primarily to the lower demand for wireless accessories
during the winter and spring months and higher demand during the December
holiday season. In addition, our net sales could be affected in the future by
business acquisitions.
The impact of inflation on the Company's operations has not been
significant to date. However, a high rate of inflation in the future poses a
risk to the Company and its ability to sustain its operating results.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk - The Company's only financial instruments with market
risk exposure are revolving credit borrowings and variable rate term loans,
which total $4,426,000 at March 31, 2000. Based on this balance, a change of one
percent in the interest rate would cause a change in interest expense for the
three months ended March 31, 2000 of $44,260, or 0.01 per share (or $0.004 per
share) net of income tax calculated using the Company's historical statutory
rates, on an annual basis.
These instruments are not entered into for trading purposes and carry
interest at a pre-agreed upon percentage point spread from one of several
designated base rates. The Company's objective in maintaining these variable
rate borrowings is the flexibility obtained regarding early repayment without
penalties and lower overall cost as compared with fixed-rate borrowings.
10
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Foreign Currency Risk - The Company does not use foreign currency forward
exchange contracts or purchase currency options to hedge local currency cash
flows or for trading purposes. All sales arrangements with international
customers and suppliers are denominated in U.S. dollars. The Company's Wireless
Products Segment purchases over 90% of its products from manufacturers located
overseas, principally in the Far East. The depreciation of the U.S. dollar
against the major Asian currencies could, therefore, cause an increase in the
cost of the Company's products and adversely affect its results of operations or
financial condition.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 -K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
On February 11, 2000, the Company filed a Current Report on Form
8-K with respect to the Company's sale of substantially all of
the assets of Tauber Electronics, Inc., its wholly owned
subsidiary, to Nexergy Tauber, Inc., a wholly owned subsidiary of
Nexergy, Inc. The Current Report contained pro forma condensed
consolidated statements of income and a condensed consolidated
balance sheet to illustrate the estimated effects of such sale.
11
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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.
By: /s/ Stephen Rade
---------------------------
Date: May 16, 2000 Stephen Rade
Chief Executive Officer
By: /s/ Ronald E. Badke
---------------------------
Date: May 16, 2000 Ronald E. Badke
Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000, AND THE UNAUDITED STATEMENTS OF
OPERATIONS FOR THE THREE MONTHS THEN ENDED CONTAINED IN THE REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2000 OF WIRELESS XCESSORIES GROUP, INC.,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 504
<SECURITIES> 0
<RECEIVABLES> 4,387
<ALLOWANCES> (162)
<INVENTORY> 5,265
<CURRENT-ASSETS> 11,379
<PP&E> 1,208
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,733
<CURRENT-LIABILITIES> 4,009
<BONDS> 0
0
0
<COMMON> 5
<OTHER-SE> 6,898
<TOTAL-LIABILITY-AND-EQUITY> 14,733
<SALES> 7,137
<TOTAL-REVENUES> 7,137
<CGS> 3,560
<TOTAL-COSTS> 3,560
<OTHER-EXPENSES> 3,194
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77
<INCOME-PRETAX> 306
<INCOME-TAX> 132
<INCOME-CONTINUING> 174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
