<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended April 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 0-13011
- --------------------------------
TNR TECHNICAL, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2565202
- ---------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
301 Central Park Drive
Sanford, Florida 32771
- ---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (407) 321-3011
--------------
None
- --------------------------------------------------------------------------------
(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 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 .
----- -----
261,981 Common Shares, $.0001 par value were issued and outstanding at April
30, 1998.
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TNR TECHNICAL, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
April 30, 1998 (Unaudited) 3
and July 31, 1997
Statements of Operations
Three and Nine Months ended
April 30, 1998 (Unaudited) and
April 30, 1997 (Unaudited) 4
Statements of Cash Flows
Nine Months ended April 30, 1998 (Unaudited)
and April 30, 1997 (Unaudited) 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7-8
PART II. OTHER INFORMATION 9
SIGNATURES 9
2
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TNR TECHNICAL, INC.
Balance Sheets
Assets
<TABLE>
<CAPTION>
July 31,1997 April 30, 1998
(Unaudited)
-------------------- ----------------------
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 528,436 582,896
Short-term investments 28,032 116,820
Accounts receivable - trade, less allowance for doubtful
accounts 574,939 633,979
Income taxes receivable 1,360 -
Inventories 782,389 838,560
Prepaid expenses and other current assets 33,717 39,946
Deferred income taxes 17,000 20,000
-------------- ----------
Total current assets 1,965,873 2,232,201
Deferred income taxes 162,000 63,090
Property and equipment, at cost, net of accumulated depreciation and
amortization 122,856 171,968
Deposits 14,394 13,694
-------------- ----------
Total assets $ 2,265,123 2,480,953
============== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 196,114 151,996
Accrued expenses 92,258 41,565
Income taxes payable - 16,079
Current installments of note payable - 11,122
-------------- ----------
Total current liabilities 288,372 220,762
Note payable, excluding current installments - 20,556
-------------- ----------
Total liabilities 288,372 241,318
-------------- ----------
Shareholders' equity:
Common stock - $.02 par value, authorized 500,000 shares; issued
301,581 shares 6,032 6,032
Additional paid in capital 2,640,001 2,640,001
Retained earnings (473,248) (210,364)
Treasury stock - 39,600 shares (196,034) (196,034)
-------------- ----------
Total shareholders' equity 1,976,751 2,239,635
-------------- ----------
$ 2,265,123 2,480,953
============= ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TNR TECHNICAL, INC.
Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sale $1,504,369 1,179,161 4,324,826 3,021,316
---------- ---------- ---------- ----------
Costs and expenses:
Cost of goods sold 1,068,027 882,176 3,177,078 2,249,304
Selling, general and administrative 259,030 236,638 790,306 684,798
---------- ---------- ---------- ----------
1,327,057 1,118,814 3,967,384 2,934,102
---------- ---------- ---------- ----------
Operating income 177,312 60,347 357,442 87,214
Non-operating revenue (expense):
Interest income 15,315 6,845 24,042 22,844
---------- ---------- ---------- ----------
Income before income taxes 192,627 67,192 381,484 110,058
Provision for income taxes 60,000 21,500 118,600 31,000
---------- ---------- ---------- ----------
Net income $ 132,627 45,692 262,884 79,058
========== ========== ========== ==========
Net income per share $ .51 .17 1.00 .30
========== ========== ========== ==========
Weighted average number of shares outstanding 261,981 262,094 261,981 262,267
========== ========== ========== ==========
</TABLE>
4
<PAGE>
TNR TECHNICAL, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
April 30,
1998 1997
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income 262,884 79,058
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 32,324 23,855
Deferred income taxes 95,910 25,000
Changes in operating assets and liabilities:
Accounts receivable (59,040) (103,761)
Deposits 700 670
Inventories (56,171) (116,309)
Prepaid expenses and other assets (6,229) (27,726)
Income taxes receivable 1,360 538
Accounts payable and accrued expenses (94,811) 62,161
Income taxes payable 16,079 --
---------- ----------
Net cash provided by (used in) operating activities 193,006 (56,514)
---------- ----------
Cash flows from investing activities :
Purchases of short term investments (88,788) (1,007,817)
Maturities of short term investments -- 1,331,750
Purchase of property and equipment (81,436) (28,549)
Purchase of treasury stock -- (1,648)
---------- ----------
Net cash provided by (used in) investing activities (170,224) 293,736
---------- ----------
Cash flows from financing activities:
Payment of principal on note payable (3,520) --
Proceeds from issuance of note payable 35,198 --
---------- ----------
Net cash provided by financing activities 31,678 --
---------- ----------
Increase in cash and cash equivalents 54,460 237,222
Cash and cash equivalents - beginning of period 528,436 426,320
---------- ----------
Cash and cash equivalents - end of period 582,896 663,542
========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
TNR TECHNICAL, INC.
Notes to Financial Statements
(1) Presentation of Unaudited Financial Statements
The unaudited financial statements have been prepared in accordance with rules
of the Securities and Exchange Commission and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows, in conformity with generally
accepted accounting principles. The information furnished, in the opinion of
management, reflects all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the financial position as of April 30,
1998, and results of operations and cash flows for the three and nine month
periods ended April 30, 1998 and 1997. The results of operations are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
(2) Sales to Major Customers
During the nine months ended April 30, 1998 and 1997, no customer accounted
for more than 10% of total revenue.
(3) Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
April 30, 1998
(Unaudited) July 31, 1997
-------------- -------------
<S> <C> <C>
Finished goods 805,018 $ 763,613
Purchased parts and materials 33,542 18,776
------- -----------
838,560 $ 782,389
======= ===========
</TABLE>
6
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Working capital amounted to $2,011,439 at April 30, 1998 as compared to
$1,677,501 at July 31, 1997. Cash and short term investments amounted to
$699,716 at April 30, 1998 as compared to $556,468 at July 31, 1997. As more
fully described under the Company's statements of cash flows in the
accompanying financial statements, net cash provided by (used in) operating
activities for the nine months ended April 30, 1997 and 1998 was $(56,514) and
$193,006, respectively. For the nine months ended April 30, 1997, cash was
used in operating activities as a result of increases in inventories, accounts
receivable and prepaid expenses partially offset by the Company's net income
and increases in payables and accrued expenses. For the nine months ended
April 30, 1998, cash was provided by operating activities due to the Company's
net income and increases in deferred income taxes partially offset by
increases in inventories and receivables and decreases in payables and accrued
expenses. The increases in accounts receivable and in inventories were due
primarily to increased sales of the Company's products during this period.
During the nine months ended April 30, 1997, cash was provided by maturities
of short term investments to fund purchases of property and equipment and to
purchase short term investment vehicles. Net cash was used in investing
activities for the nine months ended April 30, 1998 to purchase property and
equipment and short term investments.
The Company's short term and long term liquidity needs have been satisfied
from internal sources including cash from operations and amounts available
from the Company's working capital. During the balance of fiscal 1998 and on a
long term basis, management expects this trend to continue. There are no
material commitments for capital expenditures or any long term credit
arrangements.
Results of Operations
Net sales for the three months ended April 30,1998 were $1,504,369, an
increase of $325,208 or approximately 28% from the comparable period of the
prior year. Net sales for the nine months ended April 30, 1998 were
$4,324,826, an increase of $1,303,510 or approximately 43% from the comparable
period of the prior year. The increases in sales for the three and nine months
ended April 30,1998 were primarily due to increases in sales to existing and
new customers including new customers derived from the Company's expansion of
its operations into California. During the three and nine months ended April
30,1998 and April 30,1997, no customer accounted for more than 10% of total
revenues. The Company's gross margin for the three months ended April 30,1998
increased by approximately 4% and the gross margin for the nine months ended
April 30, 1998 increased by approximately 1% as compared to the comparable
period of the prior year primarily due to increases in the sales prices of the
Company's products and, to a lesser extent, changes in the mix of product
sales.
Operating (selling, general and administrative) expenses, when expressed as a
percentage of net sales decreased approximately 3% for the three months ended
April 30,
7
<PAGE>
1998 and by approximately 4% for the nine months ended April 30, 1998 from the
comparable period of the prior year. The decreases were due primarily to an
overall increase in sales in fiscal 1998. During the past three years, the
Company did not charge its operations with any research and development costs.
Net income for the three months ended April 30, 1998 was $132,627 as compared
to $45,692 for the comparable period of the prior year. Net income for the
nine months ended April 30, 1998 was $262,884 as compared to $79,058 for the
comparable period of the prior year.
Management of TNR Technical, Inc. has received a number of comments from
its odd lot stockholders regarding the costs associated with the sale of their
odd lots. Further, Management would like to reduce TNR's expense of
maintaining mailings to odd lot holders. Accordingly, TNR will from
time-to-time privately purchase from odd lot holders of its common stock, such
odd lots (i.e. 99 shares or less) from its stockholders of record on December
15, 1995 so long as such purchases would not have the effect of reducing TNR's
record holders to 500 or less. The purchase price to be paid will be based
upon the closing asked price on the NASD electronic bulletin board of TNR's
Common Stock for the preceding trading day. Stockholders will not be permitted
to breakup their stockholdings into odd lots and stockholders or their legal
representatives must affirm to TNR that the odd lot shares submitted for
payment represent the stockholder's entire holdings and that such holdings do
not exceed 99 shares. (This offer shall be open to all odd lot beneficial
holders even those held in street or nominee name so long as the proper
representations can be obtained satisfactory to TNR that the shares are odd
lot shares, were owned by the beneficial stockholder as of December 15, 1995
and represent such stockholder's entire holdings of TNR). This offer will not
be valid in those states or jurisdictions where such offer or sale would be
unlawful.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings: None
Item 2. Changes in Securities: None
Item 3. Defaults Upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security Holders:
None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
11 Earnings per share - included in the Statements
of Operations
27 Financial Data Schedule
(b) During the quarter ended April 30, 1998 no report
on Form 8-K was filed or required to be filed.
TNR TECHNICAL, 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.
TNR TECHNICAL, INC.
-----------------------------------
(Registrant)
Dated: June 13, 1998
/s/ Jerrold Lazarus
-----------------------------------------
Jerrold Lazarus (Chairman of the Board,
Chief Executive Officer, Chief Accounting
and Financial Officer and Treasurer)
9
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<EXCHANGE-RATE> 1
<CASH> 699,716
<SECURITIES> 0
<RECEIVABLES> 650,543
<ALLOWANCES> 16,564
<INVENTORY> 838,560
<CURRENT-ASSETS> 2,232,201
<PP&E> 265,793
<DEPRECIATION> 93,825
<TOTAL-ASSETS> 2,480,953
<CURRENT-LIABILITIES> 220,762
<BONDS> 0
0
0
<COMMON> 6,032
<OTHER-SE> 2,233,603
<TOTAL-LIABILITY-AND-EQUITY> 2,480,953
<SALES> 1,504,369
<TOTAL-REVENUES> 1,519,684
<CGS> 1,068,027
<TOTAL-COSTS> 1,320,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 6,300
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 192,627
<INCOME-TAX> 60,000
<INCOME-CONTINUING> 132,627
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,627
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
</TABLE>
