<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the six month period ended June 30, 1998.
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-11685-NY
RADYNE CORP.
------------
(Exact name of registrant as specified in its charter)
NEW YORK
--------
(State or other jurisdiction of incorporation or organization)
11-2569467
----------
(IRS EMPLOYER IDENTIFICATION NO.)
5225 South 37th Street, Phoenix, AZ 85040
-----------------------------------------
(Address of principal executive offices)
602-437-9620
------------
(Registrant's Telephone number)
Indicate by check mark whether the registrant (1) 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 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 |_|
Indicate by check mark whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
YES |X| NO |_|
The registrant had 5,931,346 shares of its common stock, par value
$.002, outstanding as of June 30, 1998.
<PAGE>
PART I - FINANCIAL INFORMATION
RADYNE CORP.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
ITEM 1 Unaudited Audited
<S> <C> <C>
Current Assets:
Cash & Cash Equivalents $ 813,648 $ 569,692
Account Receivable, less allowance
for doubtful accounts of $17,000 and $15,000 1,621,315 2,359,443
Inventories 4,693,509 5,389,920
Prepaids and Other Current Assets 51,239 68,076
------------ ------------
Total Current Assets 7,179,711 8,387,131
------------ ------------
Property and Equipment - Net 1,390,416 1,322,551
------------ ------------
Other Assets:
Designs and Drawings - Net of accumulated amortization
of $822,065 and $705,404 respectively 357,935 471,935
Deposits 50,000 50,000
------------ ------------
Total Other Assets 407,935 521,935
------------ ------------
Total Assets $ 8,978,062 $ 10,231,617
============ ============
Liabilities and Stockholders' Capital Deficiency
Current liabilities:
Notes payable under lines of credit $ 5,000,000 $ 5,000,000
Notes payable to affiliates 5,368,272 --
Obligations under capital leases-Current
Portion 90,068 109,258
Accounts Payable - trade 690,913 667,202
Accounts Payable - affiliates -- 16,062
Accrued Liabilities 1,063,646 901,032
Taxes payable 29,862 38,720
------------ ------------
Total Current Liabilities 12,242,761 6,732,274
------------ ------------
Note Payable under Line of Credit Agreement -- 4,500,000
Obligation under Capital Leases 53,768 93,543
Taxes Payable 30,496 55,861
------------ ------------
Total Liabilities 12,327,025 11,381,678
------------ ------------
Stockholders' Capital Deficiency:
Common Stock, $.002 par value, 20,000,000 shares
authorized, shares issued and outstanding,
5,931,346 at June 30, 1998 and December 31, 1997 11,862 11,862
Additional Paid-In Capital 5,694,806 5,694,806
Accumulated Deficit (9,055,631) (6,816,643)
Notes Receivable - employees -- (40,086)
------------ ------------
Total Stockholders' Capital Deficiency (3,348,963) (1,150,061)
------------ ------------
Total $ 8,978,062 $ 10,231,617
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
2
<PAGE>
RADYNE CORP.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Net Sales $ 2,717,965 $ 2,811,596 $ 6,666,465 $ 5,552,264
Cost of Sales 2,669,607 1,654,095 5,424,435 3,333,906
--------------------------------------------------------
Gross Profit 48,358 1,157,501 1,242,030 2,218,358
--------------------------------------------------------
Operating Expenses:
Selling, general and administrative 868,070 926,780 1,737,556 1,738,061
Research and development 708,700 572,079 1,367,644 1,123,721
--------------------------------------------------------
Total Operating Expenses 1,576,770 1,498,859 3,105,200 2,861,782
--------------------------------------------------------
Loss from operations (1,528,412) (341,358) (1,863,170) (643,424)
Interest Expense - Net 198,217 162,961 375,818 335,048
--------------------------------------------------------
Net (Loss) $(1,726,629) $ (504,319) $(2,238,988) $ (978,472)
========================================================
Basic and Diluted Net (loss) per common shares $ (0.29) $ (0.11) $ (0.38) $ (0.24)
========================================================
Weighted average number of common shares
outstanding 5,931,346 4,443,110 5,931,346 4,122,303
========================================================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
<PAGE>
RADYNE CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Ended Six Month Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
OPERATING ACTIVITIES:
Net Loss $(2,238,988) $ (978,473)
Adjustments to reconcile net loss to cash flows used
in operating activities:
Depreciation and Amortization 261,603 222,065
Changes in operating assets and liabilities:
Accounts Receivable 738,128 394,620
Inventories 696,411 (1,630,695)
Prepaid and Other Current Assets 16,837 (23,506)
Accounts Payable - Trade 23,711 12,210
Accounts Payable - Affiliates (16,062) (436,362)
Accrued Liabilities 162,614 (157,487)
Taxes Payable (34,223) (20,105)
-----------------------------
Net Cash used in Operating Activities (389,969) (2,617,733)
-----------------------------
Cash flows from investing activities:
Capital Expenditures (215,468) (356,282)
-----------------------------
Cash flows from financing activities:
Net Borrowing from or (Payment on) Notes Payable under
Line of Credit Agreements (4,500,000) 5,506,180
Proceeds from Notes Payable to Affiliates 5,368,272 --
Payments on Notes Payable to Affiliates -- (6,600,000)
Net Proceeds from sale of common stock -- 5,154,802
Notes Receivable - employees 40,086 (96,500)
Principal payments on capital lease obligations (58,965) (10,158)
-----------------------------
Net Cash provided by financing activites 849,393 3,954,324
-----------------------------
Net increase (decease) in Cash 243,956 980,309
Cash, Beginning of year 569,692 186,488
-----------------------------
Cash, End of Period $ 813,648 $ 1,166,797
=============================
Supplemental Disclosure of cash flow information:
Interest paid $ 313,602 $ 367,509
=============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
RADYNE CORP.
Notes to Condensed Financial Statements
(Information for June 30, 1998 and June 30, 1997 is Unaudited)
1. Business
Radyne Corp. (the "Company") was incorporated on November 25, 1980 and
commenced operations on May 22, 1981. On August 12, 1996 the Company became a
majority owned subsidiary of Stetsys US, Inc ("ST"). The Company designs,
manufactures and sells products, systems and software used for the transmission
and reception of data over satellite and cable communications networks.
2. Summary of Significant Accounting Policies
(a) Basis of presentation
The interim unaudited condensed financial statements furnished reflect
all adjustments which are, in the opinion of management, necessary for a fair
statement of financial position as of June 30, 1998 and the results of
operations for the three and six months ended June 30, 1998 and 1997, and cash
flows for the six months ended June 30, 1998 and 1997. Such adjustments are of a
normal recurring nature. The financial statements and notes have been prepared
in accordance with the requirements of Form 10-Q and consequently do not include
all of the disclosure normally required by generally accepted accounting
principles. This information should be read in conjunction with the financial
statements included in the Company's Form 10-K for the year ended December 31,
1997.
The results of operations for the interim period are not necessarily
indicative of the results to be expected for the full year.
(b) Revenue Recognition
The Company recognizes revenue upon shipment of products.
(c) Inventories
Inventories, consisting of satellite modems, converters and related
products, are valued at the lower of cost (first-in, first-out) or market value
including material, direct labor and overhead costs.
(d) Property and Equipment
Property and equipment are stated at cost. Expenditures for repairs and
maintenance are charged to operations as incurred, and improvements that extend
the useful lives of assets are capitalized. Depreciation and amortization of
machinery and equipment are computed using the straight-line method over the
estimated useful lives of three to seven years.
(e) Designs and Drawings
The valuation of designs and drawings is the result of adjustments made
by the Company to adopt Fresh Start reporting in accordance with AICPA Statement
of Position 90-7, `Financial Reporting By Entities in Reorganization Under the
Bankruptcy Code,' and represents the excess reorganization value that has been
applied to the acquired technology supporting the Company's products.
Amortization of designs and drawings is computed using the straight-line method
over an estimated useful life of four to seven years.
(f) Research and Development
The cost of research and development is charged to expense as incurred.
(g) Taxes on Income
Radyne will file a consolidated federal income tax return with ST
through June 1997 (conclusion of the below described Rights Offering).
Subsequent to June 1997, Radyne will file separate federal income tax returns.
Income taxes have been computed as if the Company filed separate income tax
returns for each year.
The Company accounts for income taxes under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future
consequences attributed to differences between the consolidated financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Differences between income for financial and tax reporting
purposes arise primarily from amortization of certain designs and drawings
5
<PAGE>
and accruals for warranty reserves and compensated absences. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rate is recognized as income in the period that includes the
enactment date.
(h) Earnings (Loss) Per Share
The Company presents earnings (loss) per share in accordance with
Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS
No. 128"). SFAS No. 128 prescribes a presentation of basic earnings per share,
which is calculated utilizing only weighted average common shares outstanding,
and a diluted earnings per share which gives effect to all dilutive potential
common shares outstanding during the reporting periods.
(i) Rights Offering
In November 1996 the Board of Directors approved the distribution to
stockholders, other than the Company's principal stockholder, ST, of
subscription rights for the purchase of up to 215,833 shares of the Company's
common stock at a price of $2.50 per share. The Board of Directors further
approved the distribution of subscription rights to an affiliate of ST to
purchase up to 2,040,000 shares of the Company's common stock at a price of
$2.50 per share. This Rights Offering became effective on May 12, 1997 and was
concluded in June. ST's affiliate exercised 1,976,000 of its rights and
individuals associated with such affiliate exercised another 34,000. 51,525
rights issued to stockholders other than ST were also exercised. In a related
offering under the Company's Incentive Stock Option Plan, 110,100 shares of the
Company's common stock were purchased by employees at $2.50 per share. Total
proceeds received from the Rights Offering were partially offset by $336,000 of
associated costs. The proceeds from the exercise of these rights were used, in
part, to satisfy notes payable to affiliates.
(j) Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130
Reporting Comprehensive Income, in the quarter ended March 31, 1998.
Comprehensive income is the same as net income for the quarter.
6
<PAGE>
Notes to Financial Statements
3 Inventories June 30, 1998 December 31, 1997
Unaudited Audited
Inventories consist of the following:
Raw materials and components $ 3,013,000 $ 2,605,397
Work in Process 1,178,007 1,124,929
Finished Goods 682,502 1,950,594
----------------------------
Subtotal 4,873,509 5,680,920
----------------------------
Less Valuation Allowance (180,000) (291,000)
----------------------------
Total $ 4,693,509 $ 5,389,920
============================
The Company expensed $911,000 to revalue inventory including revisions to
standard costs and a provision for obsolescence.
4 Property and Equipment June 30, 1998 December 31, 1997
Unaudited Audited
Property and Equipment consist of the
following:
Machinery and Equipment $ 1,480,340 $ 1,298,715
Furniture and Fixtures 407,391 373,548
----------------------------
Subtotal 1,887,731 1,672,263
----------------------------
Less: Accumulated depreciation (497,315) (349,712)
----------------------------
Total $ 1,390,416 $ 1,322,551
============================
5 Accrued Liabilities June 30, 1998 December 31, 1997
Unaudited Audited
Accrued liabilities consist of the
following:
Wages and related payroll taxes $ 392,970 $ 486,840
Interest Expense 246,185 183,968
Professional fees 81,000 85,500
Warranty Reserve 105,000 105,000
Other 238,491 39,724
----------------------------
Total $ 1,063,646 $ 901,032
============================
7
<PAGE>
6. Related Party Transactions
Sales to Engineering and Technical Services, Inc. and Agilis
Communication Technologies Pte Ltd, companies under common control with Radyne,
for the three months ended June 30, 1998 and 1997 were $111,575 and $121,160,
respectively. Cost of such sales for the same periods were $70,244 and $90,567,
respectively. For the six months ended June 30, 1998 and 1997 sales were
$149,756 and $466,210, respectively. Cost of such sales for the same periods
were $81,703 and $348,494, respectively.
Accounts Receivable from affiliates at June 30, 1998 and December
31,1997 was $52,260 and $19,505, respectively.
Notes payable to affiliate (ST) outstanding at June 30, 1998 and
December 31, 1997 were $5,368,272 and $ 0, respectively. These notes bear
interest at rates from 6.625% to 6.844% and mature at various dates between
January 4, 1999 and January 15, 1999.
Interest expense on notes payable to affiliates was $73,926 and $57,610
for the three months ended June 30, 1998 and 1997, respectively. For the six
months ended June 30, 1998 and 1997, interest expense on notes payable to
affiliates was $166,012 and $105,929, respectively.
Accrued interest on notes payable to affiliates was $166,012 at June
30, 1998 compared to $0 at December 31, 1997.
7. Notes Payable
The Company had a note payable under a line of credit agreement with a bank that
permitted borrowings of up to $4,500,000. At December 31, 1997, outstanding
borrowings against the line were $4,500,000 plus accrued interest. On January
15, 1998, the Company repaid the note and related accrued interest with the
proceeds from affiliated debt. The bank line was subsequently terminated.
The Company has a $5,500,000 credit agreement with a bank that includes
$5,000,000 under an uncommitted line of credit facility and facilities for bank
guarantees and/or standby letters of credit of up to $500,000. An ST affiliate
has issued a nonbinding letter of awareness in connection with this credit
agreement. Borrowings under the line of credit bear interest at a fluctuating
rate equal to LIBOR or Citibank's Quoted Rate plus 1 percent per annum (6.688%
to 6.844% as of June 30, 1998). At June 30, 1998 and December 31, 1997,
outstanding borrowings against the line were $5,000,000. The credit agreement
requires that the Company maintain certain financial leverage ratios. The
Company is currently not in compliance with this requirement. This credit
facility is an uncommitted line of credit, which the bank may modify or cancel
without prior notice.
8
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Results of operations for the three month period ended June 30, 1998
compared to the three month period ended June 30, 1997, were as follows:
The Company's net sales decreased 3% to $2,717,965 during the period
ended June 30, 1998 from $2,811,596 during the period ended June 30, 1997.
Meager shipments to the Southeast Asian markets, due to the current economic
crisis in the region, as partially offset by increased sales to other regions,
was the primary reason for the sales decrease.
The Company's cost of sales increased to $2,669,607 (98% of sales)
during the period ended June 30, 1998 from $1,654,095 (59% of sales) during the
period ended June 30, 1997. Start-up costs associated with the delivery of new
products to the market place accounted for the high period costs. The Company
expensed $911,000 to revalue inventory including revisions to standard costs and
a provision for obsolescence.
Selling, general and administrative costs decreased to $868,070 (32% of
sales) during the current period from $926,780 (33% of sales) during the period
ended June 30, 1997. The decreased level of expenses for the period was, in
part, a result of lower commission expenses.
Research and development expenditures increased to $708,700 (26% of
sales) during the current period from $572,079 (20% of sales) during the period
ended June 30, 1997. The increased level of expenses for the period was a result
of the Company's redirection of efforts to marketing our newer lines of
products, the result of which was to raise the urgency for finishing the
development phase of the newer lines and to build improved features into current
lines.
Net interest expense increased from $162,961 in the period ended June
30, 1997 to $198,217 in the current period due mainly to an increase in the
Company's debt level.
Based on the decreases in margins and higher research and development
costs, the Company experienced a net loss of ($1,726,629) during the period
ended June 30, 1998 as compared with a net loss of ($504,319) during the period
ended June 30, 1997.
The Company's new-orders-booked (Bookings) decreased to $3,118,962 for
the current period from $5,341,368 for the period ended June 30, 1997.
The Company's level of unfilled-orders-to-ship (Backlog) increased 45%
to $6,202,307 for the current period from $4,269,002 at June 30, 1997 primarily
due to the record level of Bookings received during prior periods. Due to the
continuing nature of the economic crisis in Asia, the Company has eliminated
approximately $990,000 from its December 31, 1997 backlog associated with orders
from the region.
9
<PAGE>
RADYNE CORP
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
Results of operations for the six month period ended June 30, 1998
compared to the six-month period ended June 30, 1997, were as follows:
The Company's net sales increased 20% to $6,666,465 during the period
ended June 30, 1998 from $5,552,264 during the six month period ended June 30,
1997 as a result of the Company's introduction of new products during and after
the prior period. A substantial portion of the sales increase (17% of sales)
came from the new "High-Speed" product lines that have enjoyed tremendous market
acceptance. Other products which contributed to the increase were the RCS-10 and
RCS-20 subsystems with their associated modems, the new DMD-2401 modem and the
RF product lines.
The Company's cost of sales as a percentage of net sales increased to
81% during the period ended June 30, 1998 from 60% during the six month period
ended June 30, 1997. Start-up costs associated with the delivery of new products
to the market accounted for the major portion of the increase in costs. The
Company expensed $911,000 to revalue inventory including revisions to standard
costs and a provision for obsolescence.
Selling, general and administrative costs decreased to $1,737,556 (26%
of sales) during the current period from $1,738,061 (31% of sales) during the
six month period ended June 30, 1997. The reduction as a percentage of sales was
primarily due to the increased level of sales for the period.
Research and development expenditures increased to $1,367,644 (21% of
sales) during the period ended June 30, 1998 from $1,123,721 (20% of sales)
during the six month period ended June 30, 1997. The increased level of expenses
for the period is a result of the Company's continued commitment to invest in
its' future through technological advances and its' efforts to improve our older
product lines for manufacturability and lower costs.
Net interest expense increased from $335,048 (6% of sales) in the six
month period ended June 30, 1997 to $375,819 (6% of sales) in the current period
due to an increase in the Company's debt level.
Based on the increases in costs and expenses as outlined above, the
Company experienced a net loss of ($2,238,989) during the period ended June 30,
1998 as compared with a net loss of ($978,472) during the six months ended June
30, 1997.
The Company's new-orders-booked (Bookings) increased 10% to $8,054,709
for the six month period ended June 30, 1998 from $7,348,001 for the period
ended June 30, 1997. This increase was primarily due to the successful
introduction of certain new product lines to the market during and after the
period ended June 30, 1997.
The Company's level of unfilled-orders-to-ship (Backlog) increased 45%
to $6,202,307 at June 30, 1998 from $4,269,002 at June 30, 1997 primarily due to
the increased Bookings referred to above and like increases in the previous six
months. Due to the continuing nature of the economic crisis in Asia, the Company
has eliminated approximately $990,000 from its December 31, 1997 backlog
associated with orders from the region.
Year 2000 Issue
The Company is in the process of performing a comprehensive review of
its Year 2000 issues and has completed its review of internal systems. The
majority of the Company's application software programs are purchased from and
maintained by vendors. Therefore, the Company is working with these software
vendors to verify these applications become Year 2000 compliant.
The Company presently believes that with modifications and updates to
existing software, the cost of which is not expected to be material, the Year
2000 problem will not pose significant operational problems for the Company's
internal systems.
As part of the Company's comprehensive review, it is continuing to verify the
Year 2000 readiness of third parties (vendors and customers) with whom the
Company has material relationships. The Company is not able to determine the
effect on the Company's results of operations, liquidity and financial condition
in the event the Company's material vendors and customers are not Year 2000
compliant. The Company will continue to monitor
10
<PAGE>
the progress of its material vendors and customers and formulate a contingency
plan at that point in time when the Company does not believe a material vendor
or customer will be compliant.
Liquidity and Capital Resources
The Company's working capital deficit was ($5,063,050) at June 30,
1998, a decrease in working capital of ($6,717,907) from $1,654,857 at December
31, 1997. The proceeds of a $5,368,272 short term loan from affiliate ST, were
used, in part, to satisfy the $4,500,000 long term debt to a bank. This action
and the current period loss are the primary reasons for the reduction in working
capital.
Net cash used in operating activities was $389,969 for the current
period, as compared to $2,617,733 used in the six-month period ended June 30,
1997. The primary reason for the reduction of cash used for operating activities
during the current period was changes in inventory levels and accounts payable
to affiliates.
Cash used in investing activities, consisting of additions to
equipment, was $215,468 for the current period as compared to the prior period
amount of $356,282.
The Company derived net cash from financing activities of $849,393 and
$3,954,324 during the periods ended June 30, 1998 and 1997, respectively. The
primary reason for the difference in cash generated from financing activities
during the respective periods was the sale of common stock in 1997.
As a result of the foregoing, the Company increased its cash balances
by $243,956 during the current period, compared to an increase in cash balance
of $980,309 for the six-month period ended June 30, 1997.
The Company believes that its working capital, along with borrowings
available from its bank and other commitments from its affiliates, and
anticipated cash flow from operations will provide adequate sources to fund
operations for at least the next twelve months.
Item 4 - Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders was held on May 5, 1998. Proxies
were neither solicited nor given. 5,378,000 shares were represented at the
meeting. The following matters were voted on at the meeting:
(1) The board of directors was reelected in its entirety by all
5,378,000 shares represented at the meeting.
(2) Amendment of the Company's Certificate of Incorporation (A)
prescribing a majority vote of outstanding shares for the
adoption or approval of a plan of merger or consolidation, the
sale, lease, exchange or other disposition of all or
substantially all of the assets of the Company, or a plan of
binding share exchanges, and (B) permitting the shareholders
to act without a meeting by written consent of the holders of
less than all of the outstanding shares. All 5,378,000 shares
represented at he meeting were voted in favor of both
amendments.
(3) Ratification of the selection of Deloitte & Touche LLP as the
Company's independent accountants for the fiscal year ended
December 31, 1997. All 5,378,000 shares represented at the
meeting were voted in favor of ratification.
11
<PAGE>
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibit Description
------- -----------
3.1 Restated Certificate of Incorporation
3.2* Bylaws, as amended and restated
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
covered by this report.
* Incorporated by reference from Registrant's report on
Form 10-Q, filed March 11, 1997.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: August 13, 1998 RADYNE CORP.
By: /s/ Robert C. Fitting
---------------------------------
Robert C. Fitting
President
By: /s/ Garry D. Kline
---------------------------------
Garry D. Kline
Chief Financial Officer
13
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
RADYNE CORPORATION
(as amended)
Under Section 807 of the Business Corporation Law
Pursuant to the provisions of Section 807 of the Business
Corporation Law, the undersigned, being the President and the Secretary of
the corporation, hereby certify as follows:
FIRST: The name of the corporation is: Radyne Corp.
SECOND: The date when the certificate of incorporation was
filed by the Department of State is the 25th day of November, 1980.
THIRD: The certificate of incorporation is amended to effect
the following amendments:
1. Paragraph SECOND of the certificate of incorporation, relating
to the purpose for which the corporation is formed, is hereby amended to read
as follows:
<PAGE>
"SECOND: The purpose for which the Corporation is formed is to
engage in any lawful act or activity for which corporations may be
organized under the Business Corporation Law of the State of New
York; provided, however, that the Corporation is not formed to engage
in any act or activity requiring the consent or approval of any state
official, department, board, agency or other body without such
consent or approval first being obtained."
2. Paragraph FIFTH of the certificate of incorporation,
relating to the elimination of shareholder's preemptive rights, is hereby
added, reading as follows:
"FIFTH: No holder of shares of the corporation of any class
shall be entitled as such, as a matter of right, to subscribe for,
purchase or receive any shares of the Corporation of any class, or
any securities convertible into, exchangeable for, or carrying a
right or option to purchase its shares of any class, whether now or
hereafter authorized and whether issued, sold or offered for sale by
the Corporation for cash or other consideration or by way of
dividend, split of shares or otherwise."
3. Paragraph SIXTH of the certificate of incorporation, regarding
the designation of the Secretary of State as agent upon whom any process
against the corporation may be served, is hereby amended to read as follows:
"SIXTH: The Secretary of State is designated as agent of the
Corporation upon which process against it may be served. The post
office address to which the Secretary of State shall mail a copy of
any process against the Corporation served upon him is c/o John B.
Wade, III, Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC,
153 East 53rd Street, 56th Floor, New York, New York 10022."
4. The number of issued shares of the corporation's common stock,
par value $.002 per share, is hereby amended from 18,798,605 to 3,759,721 on
a 5 for 1
<PAGE>
basis. The authorized and unissued shares of the corporation's common stock,
par value $.002 per share, is hereby amended from 1,201,395 to 16,240,279, an
increase of 15,038,884.
The text of the certificate of incorporation, as amended
heretofore, is hereby restated as further amended to read as herein set forth
in full:
"FIRST: The name of the Corporation is: Radyne Corp.
SECOND: The purpose for which the Corporation is formed is to
engage in any lawful act or activity for which corporations may be
organized under the Business Corporation Law of the State of New
York; provided, however, that the Corporation is not formed to engage
in any act or activity requiring the consent or approval of any state
official, department, board, agency or other body without such
consent or approval first being obtained.
THIRD: The office of the Corporation in the State of New York
shall be located in the County of Suffolk.
FOURTH: The Corporation shall be authorized to issue twenty
million (20,000,000) shares of common stock, par value $.002 per
share.
FIFTH: No holder of shares of the Corporation of any class
shall be entitled as such, as a matter of right, to subscribe for,
purchase or receive any shares of the Corporation of any class, or
any securities convertible into, exchangeable for, or carrying a
right or option to purchase its shares of any class, whether now or
hereafter authorized and whether issued, sold or offered for sale by
the Corporation for cash or other consideration or by way of
dividend, split of shares or otherwise.
SIXTH: The Secretary of State is designated as agent of the
Corporation upon which process against it may be served. The post
office address to which the Secretary of State shall mail a copy of
any process against the Corporation served upon him is c/o John B.
Wade, III, Brock, Fensterstock, Silverstein, McAuliffe & Wade, LLC,
153 East 53rd Street, 56th Floor, New York, New York 10022.
SEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its shareholders for damages for any
breach of duty as a director; provided that, except as hereinafter
provided, this Article SEVENTH shall neither eliminate nor limit
liability: (a) if a judgment or final
<PAGE>
adjudication adverse to the director establishes that (i) the
director's acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law, (ii) the
director personally gained in fact a financial profit or other
advantage to which the director was not legally entitled, or (iii)
the director's acts violated Section 719 of the New York Business
Corporation Law; or (b) for any act or omission prior to the
effectiveness of this Article SEVENTH. If the Corporation hereafter
may by law be permitted to further eliminate or limit the personal
liability of directors, then pursuant hereto the liability of a
director of the Corporation shall, at such time, automatically be
further eliminated or limited to the fullest extent permitted by law.
Any repeal of or modification to the provisions of this Article
SEVENTH shall not adversely affect any right or protection of a
director of the Corporation existing pursuant to this Article SEVENTH
immediately prior to such repeal or modification.
EIGHTH: The Corporation may, to the fullest extent permitted by
Section 721 through 726 of the Business Corporation Law of New York,
indemnify any and all directors and officers whom it shall have power
to indemnify under the said sections from and against any and all of
the expenses, liabilities or other matters referred to in or covered
by such section of the Business Corporation Law, and the
indemnification provided for herein shall not be deemed exclusive of
any other rights to which the persons so indemnified may be entitled
under any By-Law, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his/her official
capacity and as to action in another capacity by holding such office,
and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of such a person."
FOURTH: This restatement of the certificate of incorporation
was authorized by an affirmative vote of the holders of a majority of all
outstanding shares entitled to vote thereon, at a meeting of shareholders
subsequent to the affirmative vote of the board of directors of the
corporation.
<PAGE>
IN WITNESS WHEREOF, we hereunto sign our names and affirm that
the statements made herein are true under the penalties of perjury, this
8th day of January, 1997.
RADYNE CORP.
/s/ Robert C. Fitting
-----------------------------
Robert C. Fitting, President
/s/ Garry Kline
-----------------------------
Garry Kline, Secretary
<PAGE>
CERTIFICATE OF CHANGE
OF
RADYNE CORP.
Under Section 805-A of the Business Corporation Law
The undersigned hereby execute this Certificate of Change of Radyne
Corp. pursuant to Section 805-A of the Business Corporation Law of the State
of New York, and hereby certify as follows:
1. The name of the corporation is Radyne Corp. (the
"Corporation").
2. The Restated Certificate of Incorporation of the Corporation
was filed with the State of New York Department of State on January 13, 1997.
3. The Restated Certificate of Incorporation is changed to
provide for the change of post office address to which the Secretary of State
shall mail a copy of any process against the Corporation served upon him. To
effect the foregoing change, the second sentence of Paragraph "SIXTH" of the
Restated Certificate of Incorporation of the Corporation is hereby amended in
its entirety to read as follows:
"The post office address to which the Secretary of State
shall mail a copy of any process against the Corporation
served upon him is c/o John B. Wade, III, Dorsey & Whitney
LLP, 250 Park Avenue, New York, New York 10177."
4. The foregoing Certificate of Change was authorized by the
unanimous written consent of the board of directors of the Corporation.
<PAGE>
IN WITNESS WHEREOF, we have executed this certificate on October
31, 1997 and do hereby affirm the statement contained herein as true under
penalties of perjury.
/s/ Robert C. Fitting
--------------------------------
Robert C. Fitting, President
/s/ Garry Kline
--------------------------------
Garry Kline, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
RADYNE CORP.
Under Section 805 of the Business Corporation Law
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, being the President and the Secretary of
the corporation, hereby certify as follows:
FIRST: The name of the corporation is: Radyne Corp.
SECOND: The date when the certificate of incorporation was filed
by the Department of State is the 25th day of November, 1980.
THIRD: The certificate of incorporation is amended to effect the
following amendments:
1. As permitted by Sections 903, 909 and 913 of the Business
Corporation Law, Paragraph NINTH, prescribing a majority of the votes of all
outstanding shares entitled to vote thereon as the required vote for adoption
or approval of a plan of merger or consolidation, a sale lease, exchange or
other disposition of all or substantially all of the assets of the
corporation or a plan for
<PAGE>
binding share exchanges, is added to the certificate of incorporation to read
as follows:
"NINTH: By an affirmative vote of the holders of a majority of
all outstanding shares entitled to vote thereon, (i) a plan of merger
or consolidation in which the corporation would be a constituent
corporation may be adopted by the shareholders of the corporation as
provided in Section 903 of the Business Corporation Law, (ii) a sale,
lease, exchange or other disposition of all or substantially all of
the assets of the corporation may be approved by the shareholders of
the corporation, and the shareholders of the corporation may fix, or
may authorize the board of directors of the corporation to fix, any
of the terms and conditions of such sale, lease, exchange or other
disposition and the consideration to be received by the corporation
therefor, as provided in Section 909 of the Business Corporation Law,
or (iii) a plan of exchange in which the corporation would be the
subject corporation, within the meaning of Section 913 of the
Business Corporation Law, may be adopted by the shareholders of the
corporation as provided in paragraph (c) of Section 913 of the
Business Corporation Law."
2. As permitted by Section 615 of the Business Corporation Law,
Paragraph TENTH, permitting the shareholders of the corporation under certain
circumstances to take action on the written consent of the holders of less
than all of the outstanding shares, is added to the certificate of
incorporation to read as follows:
"TENTH: Whenever the shareholders are required or permitted to
take any action by vote, such action may be taken without a meeting
on written consent, setting forth the action so taken, signed by the
holders of outstanding shares having not less than the minimum number
of votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were present
and voted; provided that no such written consent shall be effective
unless written consents signed by a sufficient number of holders to
take action are delivered to the corporation within the time, and in
the manner, required by paragraph (b) of Section 615 of the Business
Corporation Law."
FOURTH: This certificate of amendment of the certificate of
incorporation was authorized by an affirmative vote of the holders of a
majority of
<PAGE>
all outstanding shares entitled to vote thereon, at a meeting
of shareholders subsequent to the affirmative vote of the board of
directors of the corporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that
the statements made herein are true under the penalties of perjury, this
5th day of May, 1998.
RADYNE CORP.
/s/ ROBERT C. FITTING
-------------------------------
Robert C. Fitting, President
/s/ GARRY D. KLINE
-------------------------------
Garry D. Kline, Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-Q FOR THE QUARTER ENDED 6-30-98
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 813,648
<SECURITIES> 0
<RECEIVABLES> 1,638,315
<ALLOWANCES> (17,000)
<INVENTORY> 4,693,509
<CURRENT-ASSETS> 7,179,711
<PP&E> 1,887,731
<DEPRECIATION> (497,315)
<TOTAL-ASSETS> 8,978,062
<CURRENT-LIABILITIES> 12,242,761
<BONDS> 84,264
0
0
<COMMON> 11,862
<OTHER-SE> (3,360,825)
<TOTAL-LIABILITY-AND-EQUITY> 8,978,062
<SALES> 6,666,465
<TOTAL-REVENUES> 6,666,465
<CGS> 5,424,435
<TOTAL-COSTS> 5,424,435
<OTHER-EXPENSES> 3,105,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 375,819
<INCOME-PRETAX> (2,238,989)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,238,989)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,238,989)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
</TABLE>
