<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 October 31, 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
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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
of incorporation or organization) Identification No.)
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
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(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 .
-- ---
261,849 Common Shares, $.02 par value were issued and outstanding at
October 31, 1998.
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<PAGE>
TNR TECHNICAL, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
October 31, 1998 (Unaudited) 3
and July 31, 1998
Statements of Operations
Three Months ended
October 31, 1998 (Unaudited) and
October 31, 1997 (Unaudited) 4
Statements of Cash Flows
Three Months ended October 31, 1998 (Unaudited)
and October 31, 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
------
July 31, 1998 October 31, 1998
(Unaudited)
----------------------------------
Current assets:
Cash and cash equivalents $ 597,683 708,658
Short-term investments 167,181 203,065
Accounts receivable - trade, less allowance
for doubtful accounts of $19,300 and
$18,083 599,504 619,443
Income taxes receivable - -
Inventories 814,605 791,998
Prepaid expenses and other current assets 18,614 29,857
Deferred income taxes 23,000 27,000
---------- ---------
Total current assets 2,220,587 2,380,021
Deferred income taxes 69,000 38,000
Property and equipment, at cost, net of
accumulated depreciation and amortization 185,361 178,547
Deposits 13,845 13,701
---------- ---------
Total assets $2,488,793 2,610,269
========== =========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 88,964 133,388
Accrued expenses 75,220 103,187
Income taxes payable 23,989 11,806
Current installments of note payable 11,338 11,559
---------- ---------
Total current liabilities 199,511 259,940
---------- ---------
Note payable, excluding current installments 17,639 14,665
---------- ---------
Total liabilities 217,150 274,605
---------- ---------
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 (178,236) (113,659)
Treasury stock - 39,630 and 39,732 shares (196,154) (196,710)
---------- ---------
Total shareholders' equity 2,271,643 2,335,664
---------- ---------
$2,488,793 2,610,269
========== =========
See accompanying notes to financial statements.
3
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TNR TECHNICAL, INC.
Statements of Operations
Three Months Ended
October 31,
1998 1997
(Unaudited) (Unaudited)
---------------------------
Revenues:
Net sales $1,395,257 1,347,403
---------- ---------
Costs and expenses:
Cost of goods sold 1,010,430 1,048,621
Selling, general and administrative 280,300 268,174
---------- ---------
1,290,730 1,316,795
---------- ---------
Operating income 104,527 30,608
Non-operating revenue (expense):
Interest income 7,199 3,782
Net unrealized loss on short term investments (14,149) -
---------- ---------
Income before income taxes 97,577 34,390
Provision for income taxes 33,000 10,100
---------- ---------
Net income 64,577 24,290
========== =========
Net income per share .25 .09
========== =========
Weighted average number of shares outstanding 261,907 261,981
========== =========
See accompanying notes to financial statements.
4
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TNR TECHNICAL, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1998 1997
(Unaudited) (Unaudited)
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 64,577 $ 24,290
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,095 8,526
Deferred income taxes 27,000 7,500
Provision for bad debt 2,100 2,100
Net unrealized loss on short term investments 14,149 1,758
Changes in operating assets and liabilities:
Accounts receivable (22,039) (53,343)
Purchases of short term investments (50,033) (24,992)
Deposits 144 (4,000)
Inventories 22,607 (187,428)
Prepaid expenses and other assets (11,243) (3,607)
Income taxes receivable/payable (12,183) 2,600
Accounts payable and accrued expenses 72,391 89,039
-------- ---------
Net cash provided by (used in) operating activities 120,565 (137,557)
-------- ---------
Cash flows from investing activities:
Purchase of property and equipment (6,281) (11,842)
-------- ---------
Net cash used in investing activities (6,281) (11,842)
-------- ---------
Cash flows from financing activities:
Purchase of treasury stock (556) -
Principal payments on note payable (2,753) -
-------- ---------
Net cash used in financing activities (3,309) -
-------- ---------
Increase (decrease) in cash and cash equivalents 110,975 (149,399)
Cash and cash equivalents - beginning of period 597,683 528,436
-------- ---------
Cash and cash equivalents - end of period $708,658 $379,037
======== =========
</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 October 31, 1998, and results of operations and cash flows
for the three month periods ended October 31, 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 three months ended October 31, 1998 and 1997, no customer
accounted for more than 10% of total revenue.
(3) Inventories
-----------
Inventories consist of the following:
October 31, 1998
July 31, 1998 (Unaudited)
---------------------------
Finished goods $790,982 756,358
Purchased parts and materials 23,623 35,640
-------- -------
$814,605 791,998
======== =======
6
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Working capital amounted to $2,120,081 at October 31, 1998 as compared
to $2,021,076 at July 31, 1998. Cash and short term investments amounted to
$911,723 at October 31, 1998 as compared to $764,864 at July 31, 1998. As more
fully described under the Company's statements of cash flows in the accompanying
financial statements, net cash was used in operating activities for the three
months ended October 31, 1997. For the three months ended October 31, 1997, cash
was used in operating activities as a result of increases in inventories,
accounts receivable, purchase of short term investments and prepaid expenses
partially offset by the Company's net income and increases in payables and
accrued expenses. For the three months ended October 31, 1998, cash was provided
by operating activities as a result of the Company's net income plus decreases
in inventories and increases in accounts payable and accrued expenses partially
offset by an increase in accounts receivable and short-term investments. During
the three months ended October 31, 1997 and 1998, cash was used in investing
activities to purchase property and equipment.
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 1999
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 as of October 31, 1998.
Results of Operations
Net sales for the three months ended October 31,1998 were $1,395,257,
an increase of $47,854 or approximately 3.6% from the comparable period of the
prior year. The increase in sales for the three months ended October 31,1997 was
primarily due to increases in sales to existing and new customers. During the
three months ended October 31, 1998 and 1997, no customer accounted for more
than 10% of total revenues. The Company's gross margin for the three months
ended October 31, 1998 increased by approximately 5.4% as compared to the
comparable period of the prior year primarily due to changes in the mix of
product sales and a conscious effort by management to increase selling prices
where appropriate.
Operating (selling, general and administrative) expenses when expressed
as a percentage of net sales for the three months ended October 31, 1998 and
October 31, 1997 remained relatively unchanged. 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 October 31, 1998 was $64,577 as
compared to $24,290 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,
7
<PAGE>
Management would like to reduce TNR's expense of maintaining mailings to odd lot
holders. Accordingly, TNR will from time-to-time privately purchase Common Stock
from odd lot holders (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:
During the quarter ended October 31, 1998, the Company did not have any
meeting of stockholders. However, on December 8, 1998, the Registrant held its
annual meeting of stockholders at which time the stockholders reelected the
incumbent directors, namely, Jerrold Lazarus, Norman Thaw, Wayne Thaw and Kathie
Thaw for a period of one year and until their successors are elected and shall
qualify. Two new directors, namely, Mitchell Thaw and Patrick Hoscoe, were also
elected directors to serve for a period of one year and until their successors
are elected and shall qualify.
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 October 31, 1998, no report
on Form 8-K was filed or required to be filed.
9
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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: December 11, 1998
By /s/ Jerrold Lazarus
------------------------------------------
Jerrold Lazarus (Chairman of the Board,
Chief Executive Officer, Chief Accounting
and Financial Officer and Treasurer)
10
<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> AUG-1-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 708,658
<SECURITIES> 203,065
<RECEIVABLES> 708,658
<ALLOWANCES> 18,083
<INVENTORY> 791,998
<CURRENT-ASSETS> 2,380,021
<PP&E> 300,280
<DEPRECIATION> 121,733
<TOTAL-ASSETS> 2,610,269
<CURRENT-LIABILITIES> 259,940
<BONDS> 0
0
0
<COMMON> 6,032
<OTHER-SE> 2,329,632
<TOTAL-LIABILITY-AND-EQUITY> 2,610,269
<SALES> 1,395,257
<TOTAL-REVENUES> 1,402,456
<CGS> 1,010,430
<TOTAL-COSTS> 1,288,630
<OTHER-EXPENSES> 14,149
<LOSS-PROVISION> 2,100
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 97,577
<INCOME-TAX> 33,000
<INCOME-CONTINUING> 64,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,577
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
