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 Act of 1934,
For the quarterly period ended March 31, 1996
/ / 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: 6,015,702
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ASTROCOM CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended March 31
1996 1995
<S> <C> <C>
Net Revenues $1,057,000 $ 826,000
Cost of Products Sold 654,000 485,000
Net Profit $ 403,000 $ 341,000
Expenses:
Selling and administrative expense 317,000 281,000
Research and development expense 87,000 109,000
Interest expenses 30,000 22,000
Total Expenses 434,000 412,000
Income (loss) before taxes $ ( 31,000) $( 71,000)
Income tax 0 0
Net income (loss) $ ( 31,000) $( 71,000)
Net income (loss) per share $ ( .005) $( .01)
Shares used in the computation 6,015,702 4,906,023
See notes to financial statements
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<CAPTION>
ASTROCOM CORPORATION
BALANCE SHEETS (UNAUDITED)
March 31, December 31,
1996 1995
ASSETS:
CURRENT ASSETS
<S> <C> <C>
Cash $ 2,000 $ 81,000
Accounts receivable, less allowance 673,000 616,000
for doubtful accounts
Inventories 291,000 287,000
Prepaid expenses 21,000 14,000
TOTAL CURRENT ASSETS 987,000 998,000
OTHER ASSETS 9,000 9,000
PLANT AND EQUIPMENT
Machinery and equipment 1,928,000 1,899,000
Demonstration, sample & repair inventory 61,000 74,000
Allowances for depreciation and
amortization (1,607,000) (1,551,000)
TOTAL PLANT AND EQUIPMENT 382,000 422,000
TOTAL ASSETS $1,378,000 $1,429,000
See notes to financial statements
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<CAPTION>
March 31, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Notes Payable $ 559,000 $ 566,000
Accounts Payable 493,000 604,000
Accrued Payables 139,000 66,000
Current Portion of current debt 109,000 109,000
Subordinated debt (See Note B) 200,000 200,000
TOTAL CURRENT LIABILITIES 1,500,000 1,545,000
LEASE-SETTLEMENT COSTS 90,000 93,000
LONG-TERM DEBT 28,000 0
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value 601,000 601,000
Additional paid-in capital 3,660,000 3,660,000
Accumulated deficit (4,501,000) (4,470,000)
TOTAL STOCKHOLDERS' EQUITY (240,000) (209,000)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,378,000 $1,429,000
See notes to financial statements
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<CAPTION>
ASTROCOM CORPORATION
STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (31,000) $ (71,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 56,000 25,000
Changes in operating assets and liabilities:
Accounts receivable (57,000) 41,000
Reorganization and contingent liabilities 0 (1,000)
Inventories and prepaid expenses (11,000) 56,000
Accounts payable and accrued expenses (38,000) (27,000)
Other assets 13,000 2,000
Net cash provided by operating activities (68,000) 25,000
INVESTING ACTIVITIES
Purchases of plant and equipment (29,000) (15,000)
Net cash (used in) provided by investing activities (29,000) (15,000)
FINANCING ACTIVITIES
Increase in short term debt (7,000) 41,000
Payments on bank notes payable (3,000) (54,000)
Increase in long-term debt 28,000 0
Net cash (used in) provided by financing activities 18,000 (13,000)
Increase (Decrease) in cash (79,000) (3,000)
Cash at beginning of quarter 81,000 8,000
Cash at end of quarter $ 2,000 $ 5,000
See notes to financial statements
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ASTROCOM CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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, 1994.
NOTE B - TRANSACTION WITH HANROW FINANCIAL GROUP, LTD.
Registrant has an $200,000 subordinated note payable to a related party, Hanrow
Financial Group, Ltd. (Hanrow). The note bears interest at 13% and matures on
April 5, 1996. The note is secured by a second security position in all
assets of registrant, and contains various covenants relating to registrant's
operations, financial condition and payment of dividends. As of December 31,
1994, registrant was in violation of certain covenants related to working
capital, capital base and the allowance for doubtful accounts. Registrant was
granted a waiver for the covenant violations as of December 31, 1994 and for
the period from December 31, 1994 to January 1, 1997.
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Management's Discussion and Analysis of the Results of Operations.
Comparison of First Quarters 1996 and 1995
SALES. Net revenues for the quarter ended March 31, 1996, totaled
$1,057,000, an increase of 28% from the total of $826,000 for the same quarter
of 1995. The increase was due to increased sales and marketing efforts. The
gross margin decreased from 41% in 1995 to 38% in 1996. The decrease can be
attributed to higher parts costs in 1996.
EXPENSES. Selling and administrative expenses increased 13% from
$281,000 in the quarter ended March 31, 1995, to $317,000 in the quarter ended
March 31, 1996. Selling and administrative expenses increased due to the
addition of personnel and increased marketing efforts. Research and
development expenses decreased 20% from $109,000 in 1995 to $87,000 in 1996.
Research and development expenses decreased due to a decrease in personnel in
this department. Interest expenses increased 36% from $22,000 in 1995 to
$30,000 in 1996, due to higher borrowing levels and higher interest rate in
1996.
NET LOSS. Registrant reported a net loss from operations of $31,000
for the quarter ended March 31, 1996, as compared to a net loss of $71,000
in the first quarter of 1995. The difference can be attributed primarily to
increased revenue.
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CORPORATE LIQUIDITY. Registrant's ability to generate cash adequate to
meet its needs ("liquidity") results from sale of inventory, the collection
of accounts receivable, and bank borrowings.
During the first three months of 1996, registrant was in violation of
the amended Hanrow subordinated debt loan covenants (see Note B). Hanrow
has not declared a default under the agreement.
Management believes it will maintain short-term liquidity through the
utilization of its line of credit subject to availability and by generating
cash flow from operations.
Long-term liquidity is dependent upon profitable operations that generate
adequate cash flow to meet the registrant's current obligation on a timely
basis.
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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: May 15, 1996 ASTROCOM CORPORATION
(Registrant)
By:S. Albert D. Hanser
S. Albert D. Hanser, President
and Chief Executive Officer
By:Brien W. Johnson
Brien W. Johnson,
Vice President of Finance
