<PAGE>
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 March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-9040
METRO TEL CORP.
___________________________________________________________________________
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-2014231
____________________________________________________________________________
(State of other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
250 South Milpitas Blvd., Milpitas, California 95035
___________________________________________________________________________
(Adress of principal executive offices)
(408) 946-4600
- ---------------------------------------------------------------------------
(Issuer's telephone number)
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 .
State the number of shares outstanding of each of the issuer's
classes of common equity as of the latest practicable date:
Common Stock, $.025 par value per share - 2,054,046 shares
outstanding as of May 13, 1998
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Metro Tel Corp.
Statement of Operations
(Unaudited, Note A)
For the nine months For the three months
ended March 31, ended March 31,
1998 1997 1998 1997
____________________________________________________________________________
Net sales $2,792,021 $2,821,220 $ 772,979 $1,068,290
Cost of goods sold 1,777,550 1,761,387 527,772 629,397
____________________________________________________________________________
Gross profit 1,014,471 1,059,833 245,207 438,893
____________________________________________________________________________
Selling, general, and
administrative expenses 921,365 899,713 291,228 309,800
Research and development 171,137 184,075 58,948 51,980
Interest and other income (7,704) (4,362) (2,349) (1,692)
____________________________________________________________________________
1,084,798 1,079,426 347,827 360,088
____________________________________________________________________________
Earnings (loss) before
provision (credit) for
income taxes (70,327) (19,593) (102,620) 78,805
Provision (credit) for
income taxes (28,100) (7,800) (41,000) 31,600
____________________________________________________________________________
Net earnings (loss) $ (42,227) $ (11,793) $(61,620) $ 47,205
============================================================================
Basic (loss) earnings per
common share (Note B) $ (.02) $ (.01) $ (.03) $ .02
===========================================================================
Diluted (loss) earnings per
common share (Note B) $ (.02) $ (.01) $ (.03) $ .02
==========================================================================
Weighted average number
of shares outstanding
(Note B) 2,054,046 2,015,157 2,054,046 2,037,379
============================================================================
</PAGE>
<PAGE>
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
ASSETS
____________________________________________________________________________
March 31, June 30,
1998 1997
____________________________________________________________________________
Current Assets
Cash and cash equivalents $ 346,052 $ 498,615
Accounts receivable, net 433,042 550,457
Inventories 1,649,919 1,516,339
Prepaid expenses and other 83,247 43,696
Deferred income taxes 27,000 27,000
____________________________________________________________________________
Total current assets 2,539,260 2,636,107
Property and equipment - at cost
Machinery and equipment 563,731 486,683
Furniture and fixtures 76,927 76,883
Leasehold improvements 8,765 8,765
____________________________________________________________________________
649,423 572,331
Less accumulated depreciation 487,460 457,671
____________________________________________________________________________
161,963 114,660
Other assets
Goodwill, net of accumulated
amortization of $421,618
on March 31, 1998 and
$399,256 on June 30, 1997 771,082 793,444
Other, net 9,676 10,465
____________________________________________________________________________
780,758 803,909
- ---------------------------------------------------------------------------
$3,481,981 $3,554,676
==========================================================================
</PAGE>
<PAGE>
Metro Tel Corp.
Balance Sheets
(Unaudited, Note A)
LIABILITIES AND
STOCKHOLDERS' EQUITY
____________________________________________________________________________
March 31, June 30,
1998 1997
____________________________________________________________________________
Current Liabilities
Accounts payable $ 133,614 $ 212,171
Accrued liabilities 219,969 171,880
_____________________________________________________________________________
Total current liabilities 353,583 384,051
Defrred Income Taxes 7,000 7,000
Stockholders' Equity
Preferred stock, $1 par value,
200,000 shares authorized,
none issued or outstanding
Common stock, $.025 par value,
6,000,000 shares authorized,
2,080,296 shares issued,
2,054,046 shares outstanding 52,007 52,007
Additional paid-in capital 2,152,423 2,152,423
Retained earnings 985,718 1,027,945
_____________________________________________________________________________
3,190,148 3,232,375
Less 26,250 shares of treasury
stock - at cost (68,750) (68,750)
_____________________________________________________________________________
3,121,398 3,163,625
_____________________________________________________________________________
$3,481,981 $3,554,676
=============================================================================
</PAGE>
<PAGE>
Metro Tel Corp.
Statements of Cash Flows
(Unaudited, Note A)
____________________________________________________________________________
For the nine months ended
March 31,
1998 1997
____________________________________________________________________________
Cash flows from operating activities
Net earnings (loss) $ (42,227) $ (11,793)
Adjustments to reconcile net earnings
to cash provided by operating
activities
Depreciation and amortization 52,940 48,441
(Increase) decrease in operating assets
Accounts receivable 117,415 242,101
Inventories (133,580) (35,629)
Prepaid expenses and other (39,551) (54,487)
Increase (decrease) in operating
liabilities
Accounts payable (78,557) (108,668)
Accrued liabilities 48,089 (409)
Income taxes payable - (18,866)
____________________________________________________________________________
Net cash provided (used)
by operating activities (75,471) 60,690
____________________________________________________________________________
Cash flows used in investing activities
Capital expenditures (77,092) (41,527)
____________________________________________________________________________
Cash flows from financing activities
Proceeds from exercise of stock options 46,500
- ---------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (152,563) 65,663
Cash and cash equivalents at beginning
of year 498,615 411,924
____________________________________________________________________________
Cash and cash equivalents at end of
period $ 346,052 $ 477,587
============================================================================
Supplement disclosures of cash flow
information
Cash paid during the period for
Income taxes $ 1,989 $ 60,627
</PAGE>
<PAGE>
METRO TEL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - General: The accompanying unaudited financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial statements and the instructions to Form 10-QSB
related to interim period financial statements. Accordingly, these
financial statements do not include certain information and footnotes
required by generally accepted accounting principles for complete
financial statements. However, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary in order to
make the financial statements not misleading. The results of operations
for interim periods are not necessarily indicative of the results to be
expected for the full year. For further information, refer to the
Company's financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 1997.
Note B - Earnings Per Common Share: In 1997, FASB issued Statment No. 128,
"Earnings per share". Statment No. 128 replaced the calculation of primary
and fully diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of stock options.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. Because the Company experienced a loss in some
of the reported periods, shares issuable upon the exercise of stock options
were not included in the calculation of diluted earnings per share for those
periods as their effect would have been anti-dilutive. All earnings per share
amounts for all periods have been presented to conform to the Statement
No. 128 requirments.
</PAGE>
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Liquidity and Capital Resources
During the nine month period ended March 31, 1997, cash decreased
by $152,563. The decrease resulted from $75,471 used by operating activities
and $77,092 used in investing activities to purchase capital assets. Of the
cash used by operating activities $42,227 was used to fund an operating loss
for the period, $133,580 was used to increase inventories, $39,551 was used
prepay certain expenses and $78,557 was used to reduce accounts payable. These
reductions in cash were partially offset by non cash expenses for depreciation
and amortization ($52,940), a decrease in accounts receivable ($117,415) and an
increase in accrued expenses ($48,089). The Company believes that its present
cash, and the cash it expects to generate from operations, will be sufficient
to meet operational needs.
Results of Operations
Net sales for the three and nine month periods ended March 31, 1998
were $295,311 (27.6%) and $29,199 (1.0%), respectively, lower than in the
comparable periods of the prior year. The reduction for the three month period
was mainly due to unexpected lower foreign and domestic bookings during
January and February. The sales reduction in the third quarter offset a gain
in sales for the first six months of fiscal 1998 over the same period in
fiscal 1997. For the three month period sales reductions were across all
products lines; however, for the nine month period sales increases in Outside
Plant Test Equipment and Installer's Test Sets were offset by a reduction in
sales of Transmission Test Equipment. Sales of telephone test equipment
decreased by $288,629 (28.8%) and $4,821 (.2%), respectively, for the three
and nine month periods of fiscal 1998 compared to the same periods of fiscal
1997. Sales of customer premise equipment decreased by $16,278 (50.1%) and
$45,725 (46.5%), respectively, for the three and nine month periods of fiscal
1998 when compared to the same periods of fiscal 1997. Sales of spare parts
and repairs increased by $9,596 (28.0%) for the three month period and $21,347
(19.3%) for the nine month period. The Company implemented selective price
increases during the third quarter of fiscal 1998; however, because of the
limited portion of the reported periods in effect the price increases had
minimal impact on reported sales.
The Company's gross profit margin, expressed as a percentage of sales,
decreased to 31.7% for the third quarter of fiscal 1998 from 41.1% for the
same period of fiscal 1997. For the nine month period of fiscal 1998 gross
profit margin decreased to 36.3% from 37.6% for the comparable period of
fiscal 1997. The decrease for both periods were mainly due to the reduced
level of sales which adversely effected the ability of the Company to absorb
fixed expenses and an increase in indirect labor.
Selling, general and administrative expenses decreased by $18,572 (6.0%)
for the third quarter of fiscal 1998 when compared to the same quarter of
fiscal 1997. The decrease was attributed mainly to a decrease in selling
expenses (10.9%) while general and administrative expenses remaind flat.
For the nine month period of fiscal 1998, selling, general and administrative
expenses increased by $21,652 (2.4%) over the same period of fiscal 1997. The
increase was due to increases in selling expense (13.7%) which offset a
decrease in administrative expenses (6.0%) primarily as a result of closing
the Company's New York office in January 1997.
Research and development expenses increased by $6,968 (13.4%) for the
three month period while decreasing by $12,938 (7.0%) for the nine month
period of fiscal 1998 when compared to like periods of fiscal 1997. All changes
were mainly associated with payroll and payroll expenses.
Interest and other income increased by $657 (38.8%) and $3,342 (76.6%),
respectively, for the three and nine month periods in fiscal 1998 from the
same periods of fiscal 1997 due mainly to increased cash balances invested
for most of the 1998 reported periods.
The effective tax rate for each reported period was approximately 40%.
</PAGE>
<PAGE>
PART 11 - OTHER INFORMATION
Item 7. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K were filed during the quarter ended
March 31, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
METRO-TEL CORP.
Date: May 11, 1998 By: Venerando J. Indelicato
President, Treasurer and
Principal Financial and
Chief Accounting Officer
</PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> Mar-31-1998
<CASH> 146,052
<SECURITIES> 200,000
<RECEIVABLES> 443,042
<ALLOWANCES> 10,000
<INVENTORY> 1,649,919
<CURRENT-ASSETS> 2,539,260
<PP&E> 649,423
<DEPRECIATION> 487,460
<TOTAL-ASSETS> 3,481,981
<CURRENT-LIABILITIES> 353,583
<BONDS> 0
<COMMON> 52,007
0
0
<OTHER-SE> 3,121,398
<TOTAL-LIABILITY-AND-EQUITY> 3,481,981
<SALES> 2,792,021
<TOTAL-REVENUES> 2,792,021
<CGS> 1,777,550
<TOTAL-COSTS> 1,084,798
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 10,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (70,327)
<INCOME-TAX> (28,100)
<INCOME-CONTINUING> (42,227)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,227)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
