U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934, for the quarterly period ended June 30, 1996, or
/ / Transition report under Section 13 or 15(d) of the Exchange Act, for the
transition period from to
COMMISSION FILE NUMBER 0-8482
ASTROCOM CORPORATION
(Exact name of small business issuer as specified in its charter)
MINNESOTA 41-0946755
(State or other jurisdiction (I.R.S. Employer Ident. No.)
of incorporation or organization)
2700 SUMMER STREET N.E. 55413-2820
MINNEAPOLIS, MINNESOTA (zip code)
(Address of principal executive office)
(612) 378-7800
(Issuer's telephone number)
NOT APPLICABLE
(Former name, address and former fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 6,307,369
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<CAPTION>
ASTROCOM CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended June 30
1996 1995
<S> <C> <C>
Net Revenues $ 595,000 $ 582,000
Cost of Products Sold 394,000 402,000
201,000 180,000
Expenses:
Selling and administrative expense 310,000 299,000
Research and development expense 91,000 102,000
Interest expense 35,000 28,000
Total Expenses 436,000 429,000
Income (loss) before taxes (235,000) (249,000)
Income tax 0 0
Net income (loss) $ (235,000) $(249,000)
Net income (loss) per share $ ( .04) $( .05)
Share used in the computation 6,046,375 4,906,023
See notes to financial statements
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<CAPTION>
STATEMENTS OF OPERATIONS (UNAUDITED)
ASTROCOM CORPORATION
Six Months Ended June 30
1996 1995
<S> <C> <C>
Net Revenues $1,653,000 $1,408,000
Cost of Products Sold 1,048,000 888,000
605,000 520,000
Expenses:
Selling and administrative expense 626,000 579,000
Research and development expense 179,000 211,000
Interest expense 66,000 50,000
Total Expenses 871,000 840,000
Income (loss) before taxes (266,000) (320,000)
Income tax 0 0
Net income (loss) $ (266,000) $(320,000)
Net income (loss) per share $ ( .04) $ ( .06)
Share used in the computation 6,031,038 4,906,023
See notes to financial statements
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<CAPTION>
BALANCE SHEETS (UNAUDITED)
ASTROCOM CORPORATION
June 30, December 31,
1996 1995
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 0 $ 81,000
Accounts receivable, less allowance
for doubtful accounts of $15,000 at 6/30/96
and $15,000 at 12/31/95. 741,000 616,000
Inventories 262,000 287,000
Prepaid expenses 21,000 14,000
TOTAL CURRENT ASSETS 1,024,000 998,000
OTHER ASSETS
Other 12,000 9,000
Demonstration, sample & repair inventory 74,000 74,000
PLANT AND EQUIPMENT
Machinery and equipment 1,989,000 1,899,000
Allowances for depreciation and
amortization (deduction) (1,623,000) (1,551,000)
TOTAL PLANT AND EQUIPMENT 366,000 348,000
TOTAL ASSETS $1,476,000 $1,429,000
See notes to financial statements
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<CAPTION>
June 30, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Notes payable $ 598,000 $ 566,000
Accounts payable 682,000 604,000
Employee compensation and other accrued 82,000 66,000
expenses
Current maturities of long-term debt
and capital leases 226,000 109,000
Subordinated Debt 0 200,000
TOTAL CURRENT LIABILITIES 1,588,000 1,545,000
LEASE-SETTLEMENT COSTS 87,000 93,000
Long-Term Debt 26,000 0
Total Stockholders' Equity (225,000) (209,000)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,476,000 $1,429,000
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
See notes to financial statements
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<CAPTION>
STATEMENTS OF CASH FLOWS
ASTROCOM CORPORATION
Six Months Ended June 30
1996 1995
<S> <C> <C>
Operating Activities
Net income (loss) $ (266,000) $ (320,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 72,000 66,000
Changes in operating assets and liabilities:
Accounts receivable (125,000) 105,000
Inventories and prepaid expenses 18,000 61,000
Accounts payable and accrued expenses 94,000 80,000
Other assets (3,000) 0
Net cash provided by operating activities (210,000) (8,000)
INVESTING ACTIVITIES
Purchases of plant and equipment (90,000) (43,000)
Net cash (used in) provided by investing activities (90,000) (43,000)
Financing Activities
Proceeds from long term debt 143,000 56,000
Proceeds from bank notes 32,000 10,000
Proceeds from sales of stocks 50,000 0
Payments on capital lease obligations (6,000) (21,000)
Net cash (used in) provided by financing activities 219,000 45,000
Increase (Decrease) in cash (81,000) (6,000)
Cash at beginning of quarter 81,000 8,000
Cash at end of quarter $ 0 $ 2,000
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NOTES TO FINANCIAL STATEMENTS
ASTROCOM CORPORATION
JUNE 30, 1996
NOTE A - ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance with the
instructions to Form 10-QSB. Accordingly, they do not include all information
and footnotes necessary for a complete presentation of financial position,
results of operations and statement of cash flows. In the opinion of
management, all adjustments necessary for a fair presentation of results have
been made and registrant believes such presentation is adequate to make the
information presented not misleading. For further information, refer to the
financial statements and footnotes included in registrant's annual report on
Form 10-KSB for the year ended December 31, 1995
NOTE B - TRANSACTION WITH HANROW FINANCIAL GROUP, LTD.
In March 1996, the registrant signed a letter of intent with the Hanrow
Financial Group to convert a $200,000 subordinated note into 200,000
shares of preferred stock. The preferred stock is callable by registrant
on April 5, 2000. The preferred stock bears a coupon rate of 6% payable
quarterly and is convertible into common stock at $.46 per share. In
addition, Hanrow retains the option to convert 50,000 shares of preferred
stock into a $50,000 note payable bearing an interest rate of 10% per year
on January 1, 1997. Payments would begin on January 15, 1997 and
continue for 12 months.
NOTE C - TRANSACTION WITH RELATED PARTY.
Effective November 18, 1994, registrant entered into a debenture purchase
agreement with a related party. Under the terms of the Agreement, the related
investor purchased $66,000 of registrant's unsecured debentures. The
estor purchased $66,000 of registrant's unsecured debentures. The
debentures were due on December 31, 1995, but, at holder's option, could be
converted into common stock at the rate of $.25 per share, prior to
December 31, 1995. On June 30, 1995, the holder converted $66,000 of the
debentures into shares of registrant and received a warrant to purchase
132,000 shares of registrant, at the rate of $.50 per share.
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Management's Discussion and Analysis of the Results of Operations.
Comparison of Second Quarters 1996 and 1995
SALES. Net revenues for the quarter ended June 30, 1996, totaled
$595,000, an increase of 2% from the total of $582,000 for the same quarter
of 1995. The increase was due to increased sales and marketing efforts.
The gross margin increased from 31% in 1995 to 34% in 1996. The increase can
be attributed to a favorable product mix in 1996.
EXPENSES. Selling and administrative expenses increased 4% from
$299,000 in the quarter ended June 30, 1995 to $310,000 in the quarter ended
June 30, 1996. Selling and administrative expenses increased due to
increased marketing efforts. Research and development expenses decreased
11% from $102,000 in 1995 to $91,000 in 1996. Research and development expenses
decreased due to a lower level of spending on engineering prototype materials.
Interest expenses increased 25% from $28,000 in 1995 to $35,000 in 1996,
due to higher borrowing levels and a higher interest rate in 1996.
NET LOSS. Registrant reported a net loss from operations of $235,000
for the quarter ended June 30, 1996 as compared to a net loss of $249,000 in
the second quarter of 1995. The difference can be attributed primarily to
increased revenue.
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COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996
WITH THE SIX MONTHS ENDED JUNE 30, 1995
SALES. Net revenues for the six months ended June 30, 1996, totaled
$1,653,000, an increase of 17% from the total of $1,408,000 for the same period
of 1995. Gross margins remained stable from 37% in 1995 to 37% in 1996.
EXPENSES. Selling and administrative expenses increased 8% from
$579,000 in the first six months of 1995, to $626,000 in the first six months
of 1996. The increase was due primarily to a larger number of sales
and administrative personnel during the first six months of 1996. Research
and development expenses decreased 15% from $211,000 in 1995 to $179,000 in
1996, due primarily to a lower level of spending on engineering prototype
materials. Interest expense increased 32% from $50,000 during the first six
months of 1995 to $66,000 in the first six months of 1996. This increase can be
attributed to higher borrowing levels and higher interest rates in 1996.
NET LOSS. Registrant reported a net loss of $266,000 for the first six
months of 1996, as compared to a net loss of $320,000 in the first six months
of 1995. The difference can be attributed primarily to the increase in
revenues in the first six months of 1996.
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PART II OTHER INFORMATION
ITEM 5
A. On July 17, 1996, a principal shareholder exercised warrants to purchase
200,000 additional shares of registrant's common stock.
B. Registrant is presently offering for sale up to 3,000,000 Units
(consisting of one share of registrant's common stock and a redeemable
warrant to purchase one share of registrant's common stock) on a private
placement, best efforts basis at a price of $1.00 per Unit. Unless the
minimum number of Units (1,000,000 Units) is sold prior to September 30,
1996 (or extended for up to 60 days upon the mutual agreement of registrant
and its Agent), the offering will be terminated and amounts paid by
subscribers returned without interest or deduction.
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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.
Dated: August 14, 1996 ASTROCOM CORPORATION
(Registrant)
By:S. Albert D. Hanser
S. Albert D. Hanser, President
By:Brien W. Johnson
Brien W. Johnson,
Vice President of Finance
