<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended November 30, 1996
------------------------------------------------------------
Commission File Number 2-91218-B
-------------------------------------------------------
International Electronics, Inc.
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Massachusetts 04-2654231
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
427 Turnpike Street, Canton, Massachusetts 02021
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 821-5566
- -------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Not applicable
- -------------------------------------------------------------------------------
(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 Exchange Act 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
------ ------
1,492,551 common shares were outstanding at January 5, 1997.
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
Index
-----
<TABLE>
<CAPTION>
Part I. Financial Information: Page No.
--------
<S> <C> <C>
Item 1: Financial Statements (unaudited)
-------------------------------
Condensed Consolidated Balance Sheets, November 30, 1996
and August 31, 1996 2
Condensed Consolidated Statements of Operations, three months
ended November 30, 1996 and 1995 3
Condensed Consolidated Statement of Shareholders' Equity,
three months ended November 30, 1996 4
Condensed Consolidated Statements of Cash Flows, three
months ended November 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6-8
Item 2: Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations 9-13
---------------------------------------------
Part II. Other Information:
Item 6: Exhibits and Reports on Form 8-K 14
--------------------------------
Signature 14
---------
</TABLE>
-1-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
----------------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
Nov. 30, 1996 August 31, 1996
-------------- ----------------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and equivalents $ 603,522 $ 556,745
Accounts receivable, net 1,036,484 932,255
Inventories 793,723 828,448
Other current assets 138,349 141,818
----------- -----------
Total current assets 2,572,078 2,459,266
Equipment, furniture and
improvements, net 318,001 301,300
Other assets:
Goodwill and other intangibles, net 302,742 325,313
Other 25,441 14,299
----------- -----------
328,183 339,612
----------- -----------
$ 3,218,262 $ 3,100,178
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------
Current liabilities:
Accounts payable $ 572,602 $ 592,137
Accrued expenses 831,196 703,133
Income taxes 16,000 40,000
Current portion of long-term
obligations 73,831 79,516
----------- -----------
Total current liabilities 1,493,629 1,414,786
Long-term obligations 417,984 409,451
Commitments
Shareholders' equity:
Common stock, $.01 par value:
Authorized 5,984,375 shares
Issued 1,527,551 and
1,527,051 shares 15,276 15,271
Capital in excess of par value 4,781,988 4,779,413
Accumulated deficit (3,451,971) (3,480,099)
Less treasury stock, at cost:
35,000 shares (38,644) (38,644)
----------- -----------
Total shareholders' equity 1,306,649 1,275,941
----------- -----------
$ 3,218,262 $ 3,100,178
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
-2-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------------
(unaudited)
-----------
<TABLE>
<CAPTION>
Three months ended
------------------------------
Nov. 30, 1996 Nov. 30, 1995
-------------- --------------
<S> <C> <C>
Net sales $2,298,156 $1,945,323
Cost of sales 1,367,829 1,133,372
---------- ----------
Gross profit 930,327 811,951
Research and development costs 114,118 72,765
Selling, general and
administrative expenses 763,488 694,839
---------- ----------
Income from operations 52,721 44,347
Interest expense (12,046) (14,026)
Other income 3,453 4,948
---------- ----------
Income before taxes 44,128 35,269
Provision for taxes 16,000 5,000
---------- ----------
Net income $ 28,128 $ 30,269
========== ==========
Net income per share $.02 $.02
========== ==========
Weighted average number
of common and equivalent
shares outstanding 1,720,894 1,407,669
========== ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
-3-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
-------------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Common Stock Capital in Treasury Stock
------------------ excess of Accumulated ---------------
Shares Amount par value Deficit Shares Cost Total
--------- ------- ---------- ------------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balances,
September 1, 1996 1,527,051 $15,271 $4,779,413 ($3,480,099) 35,000 ($38,644) $1,275,941
Stock issued upon
exercise of employee
stock options 500 5 675 - - - 680
Issuance of
stock warrants - - 1,900 - - - 1,900
Net income - - - 28,128 - - 28,128
Balances,
--------- ------- ---------- ----------- ------ --------- ----------
November 30, 1996 1,527,551 $15,276 $4,781,988 ($3,451,971) 35,000 ($38,644) $1,306,649
========= ======= ========== =========== ====== ========= ==========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
-4-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Three months ended
------------------------------
Nov. 30, 1996 Nov. 30, 1995
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 28,128 $ 30,269
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 61,241 54,874
Changes in operating assets and liabilities:
Accounts receivable (104,229) (76,035)
Inventories 34,725 (40,783)
Other current assets 3,469 17,917
Income taxes (24,000) 5,000
Accounts payable and accrued
expenses 108,528 66,998
--------- --------
Net cash provided by
operating activities 107,862 58,240
CASH FLOWS FROM INVESTING ACTIVITIES
AND OTHER:
Net purchase of equipment,
furniture and improvements (25,645) (16,831)
Other assets (11,142) 300
--------- --------
Net cash used in investing
activities and other (36,787) (16,531)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of notes payable and debt
obligations (26,878) (18,826)
Issuance of common stock and
warrants 2,580 -
--------- --------
Net cash used in financing activities (24,298) (18,826)
CASH AND EQUIVALENTS:
Net increase during period 46,777 22,883
Balances, beginning of period 556,745 327,812
--------- --------
Balances, end of period $ 603,522 $350,695
========= ========
SUPPLEMENTAL SCHEDULE OF NONCASH
TRANSACTIONS:
Equipment acquired under capitalized leases $ 29,726 $ -
</TABLE>
See notes to unaudited condensed consolidated financial statements.
-5-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------
(unaudited)
-----------
A. Financial Statements:
---------------------
In the opinion of the Company, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position as of
November 30, 1996 and the results of operations for the three months then
ended.
Certain disclosures normally included have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission,
although the Company believes the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the year
ended August 31, 1996.
B. Net Income per Share:
---------------------
Net income per share for the three months ended November 30, 1996 is based on
the weighted average common and dilutive common equivalent shares outstanding
during the period. Common equivalent shares consist of stock options and
warrants. Primary income per share is computed by dividing net income by the
weighted average number of common and common equivalent shares outstanding
based on the average market price of the Company's common stock (under the
treasury stock method). Income per share, on a fully diluted basis, is
computed as described above utilizing the higher of the ending or average
market price of the Company's common stock. Primary and fully diluted income
per share are the same for the three months ended November 30, 1996. Net
income per share for the three months ended November 30, 1995 assuming full
dilution has not been presented because the dilutive effect is not material.
C. Principles of Consolidation:
----------------------------
The accompanying condensed consolidated financial statements include the
accounts of the Company and its majority owned subsidiary, Ecco Industries,
Inc. All material intercompany transactions, balances and profits have been
eliminated.
D. Income Taxes:
-------------
The Company provides for income taxes at the end of each interim period based
on the estimated effective tax rate for the full fiscal year. Cumulative
adjustments to the tax provision are recorded in the interim period in which
a change in the estimated annual effective rate is determined.
-6-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------
(continued)
-----------
(unaudited)
E. Long-term Obligations:
----------------------
Long-term obligations are summarized as follows:
<TABLE>
<CAPTION>
Nov. 30, 1996 Aug. 31, 1996
-------------- --------------
<S> <C> <C>
Federal Deposit Insurance Corporation
Agreement $379,816 $385,091
11-18% capitalized lease obligations,
due through April, 2001 (Note F) 85,363 66,793
Other 14,000 14,000
9-13% equipment loans, collateralized
by equipment, final payment due
July, 1998 12,636 23,083
-------- --------
491,815 488,967
Less current portion (73,831) (79,516)
-------- --------
$417,984 $409,451
======== ========
</TABLE>
Federal Deposit Insurance Corporation (FDIC) Agreement - The renegotiated
------------------------------------------------------
agreement with the FDIC in December 1994 provided for repayment of $35,000
prior to October 1994, with payments on the remaining balance of $430,000
utilizing a 20-year amortization with payment in full at December 31, 1997.
The debt is collateralized by all of the Company's assets with interest at
the prime rate plus 1% and has been personally guaranteed by an officer of
the Company.
The aggregate principal payments on long-term obligations, excluding capital
leases are $29,599 (1997) and $376,853 (1998).
-7-
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------------
(continued)
(unaudited)
F. Capital Lease Commitments:
--------------------------
The Company leases certain equipment under capital leases and, accordingly,
the present value of the net minimum payments has been reflected in
equipment, furniture and improvements and capitalized lease obligations.
Future minimum capital lease payments under non-cancelable lease terms in
excess of one year at November 30, 1996 are as follows:
<TABLE>
<S> <C>
1997 $ 53,666
1998 20,041
1999 16,843
2000 7,250
2001 3,021
--------
Total minimum lease payments 100,821
Less interest (15,458)
--------
Net minimum lease payments 85,363
Less current portion (44,232)
--------
Long-term portion $ 41,131
========
</TABLE>
G. Capital Transactions:
---------------------
In September 1996, the Company granted warrants to two officers to purchase
an aggregate 19,000 shares of common stock at an exercise price of $2.12 per
share exercisable for a ten-year period. Each of the warrants were assigned
a value of $.10 per share to be paid by the officers.
-8-
<PAGE>
Management's Discussion and Analysis of
----------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
As of November 30, 1996, the Company had working capital of $1,078,449 compared
to $1,044,480 at August 31, 1996. The ratio of current assets to current
liabilities was 1.7 at both November 30, 1996 and August 31, 1996. The debt to
equity ratio was 1.5 at November 30, 1996 as compared to 1.4 at August 31, 1996.
The increase in working capital is primarily the result of the Company's
operating cash flow for the first quarter of fiscal 1997. The increase in the
debt to equity ratio is primarily a result of an increase in accrued warranty
expenses.
Net capital expenditures were $55,371 and $16,831 for the three months ended
November 30, 1996 and 1995, respectively. The Company has no current
commitments for any material capital expenditures, but the Company anticipates
up to $550,000 in capital expenditures for the purchase of office and
manufacturing equipment, regulatory testing and tooling costs over the next
twelve months.
As of November 30, 1996, the Company had indebtedness of approximately $380,000
under an agreement with the Federal Deposit Insurance Corporation ("FDIC"). See
Note E to Unaudited Condensed Consolidated Financial Statements. In May, 1991,
the Commissioner of Banks of the Commonwealth of Massachusetts declared the
Company's bank insolvent, and appointed the FDIC as liquidating agent of the
bank. In December, 1994, the Company renegotiated this debt with the FDIC. The
revised agreement provides for repayment of the then current balance utilizing a
20-year amortization with payment in full at December 31, 1997, and interest at
the prime rate plus 1%.
Management believes that its current cash position, together with internally
generated funds at present sales levels, will provide adequate cash reserves, to
satisfy its cash requirements for the next twelve months. Depending upon
whether or not sufficient revenue and working capital is generated from
profitable operations, the Company may require external funding. There is no
assurance that profits will be generated, or that external funding will be
obtainable, if such a need should arise.
Results of Operations
- ---------------------
Net sales for the first quarter of fiscal 1997 increased 18% as compared to the
first quarter of fiscal 1996. The increase in sales for the first quarter of
fiscal 1997 primarily reflects increases in access control and keypad sales,
offset in part by a reduction in glassbreak detector and voice verification
product sales.
The ratio of gross profit to sales for the three months ended November 30, 1996
and 1995 were 40% and 42%, respectively. The decrease is primarily the result
of product mix.
Research and development expenses were $114,118 and $72,765 for the three months
ended November 30, 1996 and 1995, respectively. The increase in costs is
primarily due to the hiring of additional personnel and related expenses.
As a percentage of net sales, selling, general and administrative expenses were
33% and 36% for the three months ended November 30, 1996 and 1995, respectively.
The decrease in expenses, as a percentage of net sales, is the result of
increased productivity from sales personnel.
-9-
<PAGE>
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
(continued)
The provision for income taxes for the first quarter of fiscal 1997 represents
foreign, federal alternative minimum taxes and state tax expense. The Company's
effective income tax rate for 1997 of 36% was less than the combined federal and
state statutory rate, primarily as a result of the utilization of available net
operating loss carryforwards.
NEW ACCOUNTING STANDARD
The Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
will be effective for fiscal 1997. The Company has not completed evaluating the
impact that the adoption of SFAS No. 121 will have on its 1997 financial
statements.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Information provided by the Company in writing and orally, from time to time may
contain certain "forward-looking" information as this term is defined by: (1)
the Private Securities Litigation Reform Act of 1995 (the "Act") and (2) in
releases made by the Securities and Exchange Commission. These Cautionary
Statements are being made pursuant to the provisions of the Act and with the
intention of obtaining the benefits of the "safe harbor" provisions of the Act.
The Company cautions investors that any forward-looking statements made by the
Company involve risks and uncertainties, which could cause actual results to
differ materially from those projected.
The Company has identified certain risks and uncertainties as factors which may
impact on its operating results which are detailed below. All of these factors
are difficult for the Company to forecast, and these or other factors can
materially adversely affect the Company's business and operating results for one
quarter or a series of quarters.
LIMITED FINANCIAL RESOURCES AND LOSSES FROM OPERATIONS. The Company has limited
financial resources. It is therefore subject to all the risks generally
associated with a small business having limited financial resources. For the
years ended August 31, 1995 and 1994, the Company has experienced losses of
approximately ($231,000) and ($49,000), respectively. For the year ended August
31, 1996 and three months ended November 30, 1996, the Company had net income of
approximately $162,000 and $28,000, respectively. There can be no assurance
that the Company will continue profitable operations. Continued operations
after the expenditure of the Company's existing cash reserves may require
additional working capital to be generated by profitable operations or
additional financing. There can be no assurance that profits will continue or
that external funding will be obtainable, if such a need should arise.
NO ACCESS TO ADDITIONAL FINANCING. In December, 1994 the Company renegotiated
debt with the FDIC which provided for repayment of the then current balance
utilizing a 20-year amortization with payment in full at December 31, 1997.
When the FDIC note becomes due in full, if the Company is unable to replace the
debt partially or in full, it may have a substantial adverse effect on the
Company's operations. The Company currently has no access to additional or
replacement financing.
-10-
<PAGE>
Management's Discussion and Analysis of
----------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
(continued)
-----------
DEPENDENCE ON KEY EMPLOYEES. The business of the Company is dependent upon the
efforts of John Waldstein and certain other key management and technical
employees. The loss or prolonged disability of such personnel could have a
significant adverse effect on the business of the Company. The Company
presently maintains a key man life insurance policy of $1,000,000 on John
Waldstein, President and Treasurer.
LIMITED DESIGN ENGINEERING STAFF. The Company is engaged in an industry which,
as a result of extensive research and development, introduces new products on a
regular basis. Current competitors or new market entrants may develop new
products with features that could adversely effect the competitive position of
the Company's products. There can be no assurance that the Company will be
successful in selecting, developing, manufacturing and marketing new products or
enhancing its existing products or that the Company will be able to respond
effectively to technological changes or product announcements by competitors.
Any failure or delay in these goals could have a material adverse affect on the
Company.
FLUCTUATIONS IN SALES AND OPERATING RESULTS. The quarterly growth rates
recently experienced by the Company are not necessarily indicative of future
quarterly growth rates. Operating results may also fluctuate due to factors
such as the timing of new product announcements and introductions by the
Company, its major customers and its competitors, market acceptance of new or
enhanced versions of the Company's products, changes in the product mix of
sales, changes in the relative proportions of sales among distribution channels
or among customers within each distribution channel, changes in manufacturing
costs, competitive pricing pressures, the gain or loss of significant customers,
increased research and development expenses associated with new product
introductions and general economic conditions. A limited number of customers
have accounted for a significant portion of sales in any particular quarter. In
addition, the Company typically operates with a relatively small backlog. As a
result, quarterly sales and operating results generally depend on the volume,
timing of, and ability to fulfill orders received within the quarter which are
difficult to forecast. In this regard, the Company may recognize a substantial
portion of its sales in a given quarter from sales booked and shipped in the
last weeks of that quarter. A delay in customer orders, resulting in a shift of
product shipment from one quarter to another, could have a significant effect on
the Company's operating results. In addition, competitive pressure on pricing
in a given quarter could adversely effect the Company's operating results, or
such price pressure over an extended period could adversely effect the Company's
long-term profitability.
The Company establishes its expenditure levels for sales and marketing and other
expenses based, in large part, on its expected future results. As a result, if
sales fall below expectations, there would likely be a material adverse effect
on operating results because only a small portion of the Company's expenses vary
with its sales in the short-term.
-11-
<PAGE>
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
(continued)
CONCENTRATION OF CUSTOMERS. Although the Company has a substantial number of
customers, a significant portion of the Company's sales are to a small number of
large customers. This concentration of customers may cause net sales and
operating results to fluctuate from quarter to quarter based on major customers'
requirements and the timing of their orders and shipments. Sales to the
Company's largest customer accounted for approximately 33% of the Company's
total net sales for the fiscal year ended August 31, 1996. The Company's
agreements with its customers generally do not include minimum purchase
requirements. There can be no assurance that the Company's major customers will
place additional orders, or that the Company will obtain orders of similar
magnitude from other customers. The Company's operating results could be
materially and adversely effected if any present or future major customer were
to choose to reduce its level of orders, were to experience financial,
operational or other difficulties that resulted in such a reduction in orders to
the Company or were to delay paying or fail to pay the Company's receivables
from such customer. In fiscal 1995, the Company lost a major domestic
distributor who filed for bankruptcy with accounts receivable due the Company of
approximately $80,000.
COMPETITION. Other companies in the industry offer products in competition with
those of the Company. Many of the companies with which the Company competes are
substantially larger, have greater resources and market a larger line of
products. The Company expects competition to increase significantly in the
future from existing competitors and new companies that may enter the Company's
existing or future markets. Increased competition could adversely affect the
Company's sales and profitability. There can be no assurance that the Company
will be able to continue to compete successfully with its existing competitors
or with new competitors.
LACK OF PATENT PROTECTION. Although the Company has obtained some patent and
copyright protection for certain of its products and software, management
believes that competitors may be able to market certain products similar to
those sold by the Company.
PRODUCTION IN ASIA. The Company presently maintains certain manufacturing molds
in Asia and has a significant amount of components for some products
manufactured in Asia. There can be no assurance that the Asian political or
economic environment will remain sufficiently stable to allow reliable and
consistent delivery of product.
DEPENDENCE ON SINGLE SOURCE OF SUPPLY. The Company is dependent upon sole
source suppliers for a number of key components and parts used in the Company's
products. There can be no assurance that these suppliers will be able to meet
the Company's future requirements for such components or that the components
will be available to the Company at favorable prices. Any extended interruption
in the supply or significant increase in price of any such components could have
a material adverse effect on the Company's operating results in any given
period.
FOREIGN SALES. During the year ended August 31, 1996, the Company's foreign
sales represented approximately 12% of net sales. There may be a reduction in
the Company's foreign sales in the event of significant changes in foreign
exchange rates or political and economic instability in foreign countries.
-12-
<PAGE>
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
(continued)
-----------
LIMITED MARKET FOR COMMON STOCK. There is a limited market for the Company's
common stock and there can be no assurance that even this limited market will be
sustained. Holders of the Company's common stock may have difficulty selling
their shares or may have difficulty selling them at a favorable price.
MAINTAIN LISTING ON NASDAQ. In March 1992, the NASD established higher standards
for a company's stock to maintain its listing on NASDAQ. The revised standards
include maintaining a minimum bid price of $1.00 per share for ten consecutive
trading days and shareholders' equity with a minimum balance of $1,000,000.
Although the Company has maintained its NASDAQ listing, the Company has, at
times, been unable to maintain the $1.00 minimum bid price criteria.
In November, 1996, the NASD proposed higher standards for a company to maintain
its stock listing on NASDAQ. If adopted as presently proposed, the new
standards would result in the Company's common stock losing its listing on
NASDAQ. The procedure for adopting such standards provides that there will be a
period of public comment and approval by the SEC. It is expected that the final
standards will be effective during the first quarter of calendar 1997.
One of the presently proposed standards include maintaining minimum net tangible
shareholders' equity of $2,000,000. As of November 30, 1996, the Company had net
tangible shareholders' equity of approximately $1,005,000. If this proposed
standard is adopted, the Company would not meet the standard and, unless the
Company increases its net tangible shareholders' equity to $2,000,000, the
Company's common stock would no longer be listed on NASDAQ. At the present time,
it is not possible to determine what the new standards will be, whether the
Company will be able to achieve and/or maintain the proposed standards, and
consequently, it is not possible to know whether the Company will be able to
have its common stock listed on NASDAQ. If the Company is unable to maintain
its listing on NASDAQ, holders of the Company's common stock may have additional
difficulty selling their shares or may have difficulty selling them at a
favorable price.
VOLATILITY OF STOCK PRICE. The Company's stock price is subject to significant
volatility. If revenues or earnings in any quarter fail to meet the investment
community's expectations, announcements of new products by the Company or its
competitors and other events or factors could have an immediate impact on the
Company's stock price. The stock price may also be affected by broader market
trends unrelated to the Company's performance.
-13-
<PAGE>
Part II. Other Information
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
------- --------------------------------
(a) Exhibits:
--- ---------
(11.1) Calculation of Net Income Per Share
(27) Financial Data Schedule
(b) There were no reports on Form 8-K filed for the
three months ended November 30, 1996.
SIGNATURE
---------
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, who is duly
authorized to sign and is Chief Financial and Accounting Officer.
International Electronics, Inc.
Date: 1/10/97 /s/ John Waldstein
------- --------------------
John Waldstein, President,
Treasurer & Chief Financial and Accounting
Officer and duly authorized to sign.
-14-
<PAGE>
EXHIBIT 11.1
International Electronics, Inc.
Calculation of Net Income Per Share
Three Months Ended November 30, 1996
PRIMARY NET INCOME PER SHARE
- ----------------------------
<TABLE>
<CAPTION>
<S> <C>
Weighted average common and
equivalent shares:
Common stock 1,492,469
Common equivalent shares
resulting from dilutive stock
options and warrants (treasury
stock method using the average
market price) 228,425
----------
Total 1,720,894
==========
Net income $ 28,128
==========
Net income per share $ .02
==========
</TABLE>
FULLY DILUTED NET INCOME PER SHARE
- ----------------------------------
<TABLE>
<CAPTION>
Weighted average common and
equivalent shares:
<S> <C>
Common stock 1,492,469
Common equivalent shares
resulting from dilutive stock
options and warrants (treasury
stock method using the higher
of the ending or average
market price) 247,901
----------
Total 1,740,370
==========
Net income $ 28,128
==========
Net income per share $ .02
==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENT OF FINANCIAL CONDITION AT NOVEMBER
30, 1996 (UNAUDITED) AND THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
NOVEMBER 30, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 603,522
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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0
0
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<EPS-PRIMARY> .02
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</TABLE>
