<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
F O R M 10 - QSB
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarter Ended Commission File Number 0-12370
January 31, 1998
SI TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-3381440
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
4611 South 134th Place, Seattle, Washington 98168
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(206) 244-6100
--------------------------------------------------------------------------
Registrant's telephone number, including area code
SAME
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report.)
Check whether the registrant (1) has 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 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 CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date. 2,548,240 shares of
Common Stock, par value $.01 on March 11, 1998.
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
SI TECHNOLOGIES, INC.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
January 31, July 31,
---------------------------
1998 1997
<S> <C> <C>
Assets
Current assets:
Cash $ 59,219 $ 128,051
Trade accounts receivable, less allowance for doubtful
accounts of $99,256 and $117,000 respectively 4,056,552 2,775,658
Inventory 3,176,792 3,071,971
Deferred tax asset 250,945 262,100
Refundable income taxes -- 702,545
Other current assets 162,355 222,221
---------------------------
Total current assets
7,705,863 7,162,546
Property and equipment, less accumulated depreciation
and amortization 1,020,015 1,161,131
Other assets:
Intangible assets, net 7,387,051 7,495,313
Other 554,690 578,126
---------------------------
$16,667,619 $16,397,116
===========================
Liabilities and stockholders' equity
Current liabilities:
Notes payable to bank $ 3,000,000 $ 3,000,000
Current maturities of long-term debt 392,800 392,800
Put option obligations -- 385,000
Trade accounts payable 1,461,337 1,904,668
Income taxes payable 233,646 --
Accrued liabilities 705,998 1,046,585
---------------------------
Total current liabilities 5,793,781 6,729,053
Long term debt, less current maturities 4,351,483 3,936,636
Deferred taxes 178,300 178,300
Stockholders' equity
Common stock, par value $.01 per share. Authorized
10,000,000 shares; issued and outstanding, 2,347,240 shares 23,472 23,472
Preferred stock, par value $.01 per share. Authorized
2,000,000 shares; none outstanding -- --
Additional paid-in capital 5,154,268 4,769,268
Retained earnings 1,166,315 760,387
---------------------------
Total stockholders' equity 6,344,055 5,553,127
---------------------------
$16,667,619 $16,397,116
===========================
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 3
SI TECHNOLOGIES, INC.
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
For the three month period ended For the six month period ended
January 31 January 31
----------------------------------------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 5,081,557 $ 2,835,886 $ 9,976,607 $ 5,797,624
Cost of sales 2,927,351 1,603,031 5,643,937 3,236,922
----------- ----------- ----------- -----------
GROSS PROFIT 2,154,206 1,232,855 4,332,670 2,560,702
Operating expenses:
Selling and general and administrative 1,207,392 802,471 2,437,520 1,673,651
Research, development and engineering 249,540 210,159 507,950 451,681
Amortization of intangibles 71,687 27,733 143,065 55,332
----------- ----------- ----------- -----------
1,528,619 1,040,363 3,088,535 2,180,664
----------- ----------- ----------- -----------
EARNINGS FROM OPERATIONS 625,587 192,492 1,244,135 380,038
Interest expense (256,723) (52,833) (541,225) (101,654)
Other income/expense, net (18,068) 1,684 (14,982) 6,439
----------- ----------- ----------- -----------
NET EARNINGS BEFORE INCOME TAXES 350,796 141,343 687,928 284,823
Income tax expense (143,000) (52,305) (282,000) (105,317)
----------- ----------- ----------- -----------
NET EARNINGS $ 207,796 $ 89,038 $ 405,928 $ 179,506
=========== =========== =========== ===========
NET EARNINGS PER COMMON SHARE $ 0.09 $ 0.04 $ 0.17 $ 0.08
=========== =========== =========== ===========
Weighted average shares outstanding 2,347,240 2,347,240 2,347,240 2,347,240
=========== =========== =========== ===========
NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE, ASSUMING DILUTION $ 0.08 $ 0.04 $ 0.16 $ 0.07
=========== =========== =========== ===========
Weighted average common and
common equivalent shares outstanding 2,546,348 2,407,457 2,532,879 2,413,118
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 4
SI TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six month period ended
January 31
------------------------------
1998 1997
<S> <C> <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
Net earnings $ 405,928 $ 179,506
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities:
Depreciation and amortization 423,030 222,964
Deferred income taxes 11,155 (7,300)
Changes in operating assets and liabilities:
Increase in trade accounts receivable (1,280,894) (230,181)
Decrease (increase) in inventories (104,821) 103,457
Decrease in refundable income taxes 702,545 --
Decrease in other current assets 59,866 42,193
Decrease in trade accounts payable (443,331) (43,619)
Decrease in accrued liabilities (340,587) (7,594)
Increase (decrease) in income taxes payable 233,646 (107,964)
----------------------------
Net cash provided by (used in) operating activities (333,463) 151,462
Cash flows from investing activities:
Increase in other assets (34,803) (16,668)
Purchase of equipment and software development (115,412) (329,585)
----------------------------
Net cash used in investing activities (150,215) (346,253)
Cash flows from financing activities:
Borrowings on line of credit 550,561 287,426
Payments on long-term debt (135,715) (105,938)
----------------------------
Net cash used in financing activities 414,846 181,488
----------------------------
Net decrease in cash (68,832) (13,303)
Cash at beginning of period 128,051 57,737
----------------------------
Cash at end of period $ 59,219 $ 44,434
============================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 600,306 $ 108,581
Income taxes $ 47,000 $ 212,400
Noncash investing and financing activities:
Put option obligations $ -- $ 385,000
</TABLE>
See notes to consolidated financial statements
4
<PAGE> 5
SI TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1. FINANCIAL STATEMENTS
The unaudited consolidated financial statements of the Company and its
subsidiaries have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the entire fiscal year ending July 31, 1998. This form 10-QSB should be read in
conjunction with the Annual Report and form 10-KSB for the year ended July 31,
1997.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost (on a first-in, first-out basis) or
market and consisted of the following at:
<TABLE>
<CAPTION>
JANUARY 31, 1998 JULY 31, 1997
(UNAUDITED)
<S> <C> <C>
Raw Materials $ 1,429,783 $ 1,232,294
Work in Progress 686,861 762,426
Finished Goods 1,229,452 1,265,251
------------ ------------
3,346,096 3,259,971
Less allowance for obsolescence 169,304 188,000
============ ============
$ 3,176,792 $ 3,071,971
============ ============
</TABLE>
NOTE 3. BASIC NET EARNINGS AND DILUTED NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE
Basic net earnings per share and diluted net earnings per share are based on the
following computations.
<TABLE>
<CAPTION>
For the Three Month Period Ended January 31, 1998
-------------------------------------------------------
Per Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
Basic Net Earnings per Share
Income available to common shareholders $ 207,796 2,347,240 $ 0.09
Effect of Dilutive Securities
Stock options 199,108
Diluted EPS
Income available to common shareholders
plus assumed conversions $ 207,796 2,546,348 $ 0.08
</TABLE>
<TABLE>
<CAPTION>
For the Three Month Period Ended January 31, 1997
-------------------------------------------------------
Per Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
Basic Net Earnings per Share
Income available to common shareholders $ 89,038 2,347,240 $ 0.04
Effect of Dilutive Securities
Stock options 60,217
Diluted EPS
Income available to common shareholders
plus assumed conversions $ 89,038 2,407,457 $ 0.04
</TABLE>
5
<PAGE> 6
NOTE 3. BASIC NET EARNINGS AND DILUTED NET EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE (CONTINUED)
<TABLE>
<CAPTION>
For the Six Month Period Ended January 31, 1998
---------------------------------------------------
Per Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
Basic Net Earnings per Share
Income available to common shareholders $ 405,928 2,347,240 $ 0.17
Effect of Dilutive Securities
Stock options 185,639
Diluted EPS
Income available to common shareholders
plus assumed conversions $ 405,928 2,532,879 $ 0.16
</TABLE>
<TABLE>
<CAPTION>
For the Six Month Period Ended January 31, 1997
--------------------------------------------------
Per Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
Basic Net Earnings per Share
Income available to common shareholders $ 179,506 2,347,240 $ 0.08
Effect of Dilutive Securities
Stock options 66,639
Diluted EPS
Income available to common shareholders
plus assumed conversions $ 179,506 2,413,879 $ 0.07
</TABLE>
NOTE 4. AUTHORIZED COMMON AND PREFERRED STOCK
At the January 22, 1998 annual shareholders meeting, the shareholders approved
an amendment to the Company's Restated Certificate of Incorporation increasing
the authorized number of shares of Common Stock to 10,000,000 shares from
5,000,000 and authorizing 2,000,000 shares of a new class of Preferred Stock.
NOTE 5. SUBSEQUENT EVENT
On February 13, 1998 the Company merged, in a pooling of interest merger, with
NV Technology, Inc., a Las Vegas, Nevada corporation engaged in the force
measurement device industry. The effect of the merger was an exchange of all the
outstanding capital stock of NV Technology for 200,000 shares of SI
Technologies, Inc. common stock.
6
<PAGE> 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
SI Technologies, Inc. and Subsidiaries ("SI" or the "Company") is a rapidly
growing designer, manufacturer and marketer of equipment and engineered systems
that enhance the processing, handling, movement and transportation of goods and
materials. The Company's products include dynamic and stationary weighing
systems, load handling and moving systems, measurement devices, instrumentation
and operations information systems. SI products are used throughout the world in
a wide variety of industries, including aerospace, agriculture, automotive,
aviation, construction, forestry, freight transportation, maritime, mining, and
waste management.
In recent years, the Company has been capitalizing on its technology and
existing customer relationships through product and market expansion in the
$30-billion industrial weighing and material handling equipment industry.
Driving SI's business expansion are both an aggressive internal product
development program and the acquisition of businesses with technology and
revenue synergy.
PRODUCTS AND SERVICES
Weighing Systems
SI designs and manufactures dynamic and stationary electronic weighing systems
for use in a wide array of industrial applications. As a result of the
uniqueness of the Company's weighing system products, SI is one of few
manufacturers in the industry who design and manufacture all three of the
primary components of an electronic scale. These components are the load
handling structure, force measurement devices and instrumentation. Many
manufacturers of conventional scale systems manufacture only load handling
structures, outsourcing to standard industry suppliers their force measurement
device and instrumentation requirements. The Company utilizes its expertise and
manufacturing know-how in each of these critical components to competitive
advantage.
Dynamic or mobile weighing systems commonly known as on-board scales are
installed on transportation vehicles and material handling equipment to inform
operators, and record for operations management; gross vehicle, axle group,
payload, and incremental pick-up and delivery weights as the vehicle is loaded
or unloaded. SI systems are available in modular kits for use on all major
original equipment manufacturer (OEM) trucks, trailers, forklifts and loaders.
Products are marketed under the AirScale, RouteMan, SmartPin, Trojan, TruxScale,
and Tuffer trade names to the aggregate, agriculture, construction, forestry,
freight transportation, mining, and waste management industries. These
industries constitute the primary markets for on-board weighing systems as they
often have loads that vary in weight, are difficult to estimate and fleets that
load and unload in locations that are not in close proximity to conventional
in-ground truck scales. The systems are utilized to increase productivity and
reduce operating expense in material handling, loading and transporting
operations. Depending on application, specific economic benefit is derived from
reduced overweight vehicle fines and delays; reduced time loading, checkweighing
and adjusting loads to maximum legal limits; reduced mileage and driving time to
checkweighing locations such as commercial in-ground truck scales; immediate
measurement and recording of pick-up and delivery weights; reduced equipment
abuse, maintenance downtime and expense; and higher capital equipment capacity
utilization.
Load Handling and Moving Systems
Load handling and moving systems manufactured and marketed by the Company
utilize both standard and highly specialized air and water bearing movement
systems to move loads of any weight efficiently and with extreme precision. Air
bearings are air cushion devices that are used to "float" heavy loads on a thin
film of air. Additionally, the Company manufactures systems utilizing water
bearings for use in large outdoor applications where water is used as the
flotation medium rather than air. These products, marketed under the trade names
AeroGo, AeroCaster, AeroPlanks and AeroPallets, are the world leader in
practical and efficient methods of rotation, alignment, transfer, location and
movement of materials and products weighing from several hundred pounds to more
than 6,100 tons.
The Company's load handling and moving product line comprises two distinct
categories. The first is a standard product line of rugged, industrial,
off-the-shelf air cushion devices that allow a single person to easily and
safely move loads weighing from a few hundred pounds to many tons. Standard
products are routinely used to move manufacturing fixtures, printing press bulky
paper rolls, jet engines, and other heavy loads. The other category of the
product line consists of custom-engineered products. Custom-engineered products
and specialized systems designed and manufactured by the Company in recent years
are currently being used to move 100,000-pound dies, launching
7
<PAGE> 8
ships, moving 4,500-ton stadium sections, transporting aerospace booster rockets
and moving large assemblies in and out of assembly line operations in numerous
heavy equipment manufacturing facilities.
RESULTS OF OPERATIONS
Sales
Net sales increased to $5,081,557 for the quarter ended January 31, 1998
from $2,835,886 for the same period last year. This is an increase of
$2,245,671 or 79% from the prior year's second quarter results. Net sales
for the six month period ending January 31, 1998 were $9,976,607 compared to
$5,797,624 in the same period of fiscal 1997. This is an increase of
$4,178,983 or 72% from the prior year's first six months.
The increased sales in the quarter are the result of incremental sales
resulting from the inclusion of AeroGo operations which were acquired in
July 1997. Sales in the quarter benefited from continued diversification in
the Company's customer base and sales of an expanded range of product lines
which have greatly diminished the Company's historical reliance on the
forestry and waste markets. The traditional forestry and waste markets have
been reduced to approximately 25% of total sales from a level of nearly 70%
before the diversification created by recent acquisitions.
Gross Profit
Gross profit for the quarter was $2,154,206 compared to $1,232,855 in the
second quarter last year. This is an increase of $921,351 or 75% from the
prior year's second quarter results. Gross profit for the six month period
ending January 31, 1998 was $4,332,670 compared to $2,560,702 in the same
period of fiscal 1997. This is an increase of $1,771,968 or 69% from the
prior year's first six months.
Gross profit as a percentage of sales was 42.4% in this year's second
quarter as compared to 43.5% in last year's second quarter. For the six
month period ending January 31, 1998 gross profit as a percentage of sales
was 43.4% as compared to 44.2% recorded in the first six months of last
year. The reduced gross margin percentage is the result of a different
product mix in the quarter as compared to last year and to a large custom
project which was bid at lower than average gross profit margin.
Selling, General and Administrative Expenses
SG & A expenses increased to $1,207,392 for the quarter ended January 31,
1998 from $802,471 for the same period last year. This is an increase of
$404,921 or 51% from the prior year's second quarter. SG & A expense as a
percentage of revenue was 24% in this year's second quarter and 28% in the
second quarter of last year. SG & A expenses for the six month period ending
January 31, 1998 were $2,437,520 as compared to $1,673,651 in the same
period of fiscal 1997. This is an increase of $763,869 or 46%. For the six
month period of 1998 SG & A expenses were 24% as a percentage of revenue as
compared to 29% during the first six months of fiscal 1997.
Total SG & A expenses increased due to the inclusion of the AeroGo
operations in the quarter following the July 1997 acquisition. However, the
added level of expense was much lower than the sales increase, thereby
resulting in a favorable reduction in the ratio of total SG & A expense to
sales.
Research, Development and Engineering Expenses
RD & E expenditures increased to $249,540 for the quarter ended January 31,
1998 from $210,159 for the same period last year. This is an increase of
$39,381 or 19% from the prior year's second quarter. RD & E expenses as a
percentage of revenues decreased to 5% from 7% in the same quarter of last
year. RD & E expenditures were $507,950 for the six month period ending
January 31, 1998 as compared to $451,681 in the same period of 1997. This is
an increase of $56,269 or 13% from the same period of fiscal 1997.
While total RD & E investment continues to increase, the lower RD & E
spending ratio to sales reflects a return to a spending rate in line with
industry norms after several years of accelerated investment and the benefit
of combining resources of acquired companies to leverage RD & E investment
across all operations of the Company.
Intangibles
The amortization of intangibles increased to $71,687 for the quarter ended
January 31, 1998 from $27,733 for the same period last year. This is an
increase of $43,954 or 159% from the prior year's second quarter. For the
six month period ending January 31, 1998, amortization of intangibles was
$143,065 as compared to $55,332 in the same period of last fiscal year. This
is an increase of $87,733 or 159% from the prior year's six month period.
This increase reflects the amortization of intangibles associated with the
acquisition of AeroGo, Inc. made in July 1997.
8
<PAGE> 9
Interest Expense and Other Income/expense,(net)
Interest expense increased to $256,723 for the quarter ended January 31,
1998 from $52,833 for the same period last year. This is an increase of
$203,890 or 386% from the prior year's second quarter. For the six month
period ending January 31, 1998 interest expense was $541,225 as compared to
$101,654 in the same period of last fiscal year. This is an increase of
$439,571 or 432% from the prior year's six month period. The increased
interest expense is the result of the increased debt incurred for the AeroGo
acquisition and from increased working capital needs.
Income Tax Expense
Income tax expense increased to $143,000 for the quarter ended January 31,
1998 from $52,305 for the same period last year. This is an increase of
$90,695 or 173% from the prior year's second quarter. For the six month
period ended January 31, 1998 income tax expense was $282,000 as compared to
$105,317 in the same period of last year. This is an increase of $176,683 or
168%. The increased expense reflects the higher pretax income recorded in
the current quarter. The effective tax rate for the quarter exceeds the U.S.
federal corporate income tax rate of 34% primarily due to the amortization
of intangible assets which is not deductible for income tax purposes and due
to state income taxes.
INFLATION
Historically, the impact of inflation has been negligible, as the Company has
been able to offset the effects through efficiency and price increases.
LIQUIDITY AND CAPITAL RESOURCES
In July 1997, the Company amended its principal credit agreement with its bank
for the purpose of financing the acquisition of AeroGo, Inc. This agreement
included an increase to the Company's existing line of credit from $2,000,000 to
$4,000,000, a one year note in the amount of $3,000,000 due July 31, 1998 and a
seven year note in the amount of $1,900,000. The amended credit agreement
includes a requirement that the Company obtain additional equity financing of no
less than $3,200,000 no later than July 31, 1998. The Company's credit facility
requires the Company to maintain certain levels of working capital,
stockholders' equity and contains other covenants.
The Company's line of credit of $4,000,000 continues to be extended as
requested. As of January 31, 1998, the Company had outstanding borrowings of
$2,725,397 under the line of credit which is included in long term debt.
The Company believes cash flow from operations, the funds available under its
bank facility and the proceeds of its anticipated equity financing will be
sufficient to meet the Company's working capital needs, anticipated capital
expenditures and payments required under its credit facilities. Should the
Company be unable to raise sufficient equity capital to meet its obligations
under its credit facilities it could have a material adverse effect on the
Company's financial condition and results of operations. Future acquisition
activity may require equity capital in excess of the equity financing committed
to under the Company's existing credit agreement.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders was held January 22, 1998 at the
Mayflower Park Hotel, Seattle, WA.
At the annual meeting the shareholders elected the directors as
nominated.
<TABLE>
<CAPTION>
Director For Withheld
-------- --- --------
<S> <C> <C>
Edward A. Alkire 2,166,530 1,050
Rick A. Beets 2,166,530 1,050
Ralph Crump 2,166,530 1,050
S. Scott Crump 2,166,530 1,050
D. Dean Spatz 2,166,530 1,050
Heinz Zweipfennig 2,166,530 1,050
</TABLE>
The shareholders also approved at the annual meeting an amendment to the
Restated Certificate of Incorporation increasing the authorized number
of shares of Common Stock to 10,000,000 shares from 5,000,000 and
authorizing 2,000,000 shares of a new class of Preferred Stock.
<TABLE>
<CAPTION>
For Against Withheld
--- ------- --------
<S> <C> <C>
1,611,630 20,150 11,522
</TABLE>
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits to Part II
Exhibit 3(i) Certificate of Amendment to the Certificate of
Incorporation of SI Technologies, Inc.
Exhibit 27 (a)Financial Data Schedule January 31, 1998
Exhibit 27 (b)Financial Data Schedule July 31, 1996 Restated EPS
per SFAS 128
Exhibit 27 (c)Financial Data Schedule January 31, 1997 Restated EPS
per SFAS 128
Exhibit 27 (d)Financial Data Schedule July 31, 1997 Restated EPS
per SFAS 128
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter.
The items omitted are either inapplicable or are items to which the answer is
negative.
10
<PAGE> 11
SI TECHNOLOGIES, INC.
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.
SI TECHNOLOGIES, INC.
March 12, 1998 /s/ Rick A. Beets
--------------------------------
Rick A. Beets
President, CEO & CFO
(Principal Executive & Financial Officer)
11
<PAGE> 1
Exhibit 3 (i)
CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF
SI TECHNOLOGIES, INC.
SI Technologies, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that:
FIRST: That at a meeting of the Board of Directors of the Corporation,
the amendments to the Certificate of Incorporation of said Corporation set forth
on Exhibit A attached hereto were duly approved, authorized and declared
advisable by the Board of Directors.
SECOND: That thereafter at the annual meeting of stockholders of the
Corporation the consent of the stockholders of said Corporation was given to the
amendments set forth on Exhibit A attached hereto.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Sections 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by its duly authorized officer this __30th_ day of January, 1998.
SI TECHNOLOGIES, INC.
By /s/ Rick Beets
------------------------------
Rick Beets, President
12
<PAGE> 2
EXHIBIT A
The Article Fourth of the Certificate of Incorporation of the Company
shall be amended to read in its entirety as follows:
"Article Four. The corporation shall have authority to issue 12,000,000
shares of stock in the aggregate. Such shares shall be divided into two
classes as follows:
(1) 10,000,000 (Ten Million) shares of common stock, par value $0.01.
(2) 2,000,000 (Two Million) shares of preferred stock, par value $0.01.
The Preferred Stock authorized by this Certificate of Incorporation may be
issued from time to time in one or more series. The Board of Directors is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or of any of
them. Subject to compliance with applicable protective voting rights that have
been or may be granted to the Preferred Stock or series thereof in Certificates
of Determination or this corporation's Certificate of Incorporation ("Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to dividends, liquidation and
acquisition preferences, redemption and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class or
series of Preferred or Common Stock. Subject to compliance with applicable
Protective Provisions, the Board of Directors is also authorized to increase or
decrease the number of shares of any series, prior or subsequent to the issue of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall thereafter constitute authorized but
undesignated shares."
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 59,219
<SECURITIES> 0
<RECEIVABLES> 4,056,552
<ALLOWANCES> 99,256
<INVENTORY> 3,176,792
<CURRENT-ASSETS> 7,705,863
<PP&E> 1,020,015
<DEPRECIATION> 1,852,641
<TOTAL-ASSETS> 16,667,619
<CURRENT-LIABILITIES> 5,793,781
<BONDS> 0
0
0
<COMMON> 23,472
<OTHER-SE> 6,320,583
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