<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 January 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 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
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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 .
--- ---
261,981 Common Shares, $.0001 par value were issued and outstanding at
January 31, 1998.
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TNR TECHNICAL, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
January 31, 1998 (Unaudited) 3-4
and July 31, 1997
Statements of Operations
Three Months and six months ended
January 31, 1998 (Unaudited) and
January 31, 1997 (Unaudited) 5
Statements of Cash Flows
Six Months ended January 31, 1998 (Unaudited)
and January 31, 1997 (Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-9
PART II. OTHER INFORMATION 10
2
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TNR TECHNICAL, INC.
Balance Sheets
<TABLE>
<CAPTION>
Assets
January 31, 1998
July 31, 1997 (Unaudited)
------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 528,436 503,358
Short-term investments 28,032 52,061
Accounts receivable - trade, less allowance for doubtful
accounts of $14,860 and $16,603 574,939 641,789
Income taxes receivable 1,360 -
Inventories 782,389 798,414
Prepaid expenses and other current assets 33,717 35,804
Deferred income taxes 17,000 19,000
------------- ----------
Total current assets 1,965,873 2,050,426
Deferred income taxes 162,000 112,500
Property and equipment, at cost, net of accumulated
depreciation and amortization 122,856 173,001
Deposits 14,394 13,694
------------- ----------
Total assets $ 2,265,123 2,349,621
============ ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TNR TECHNICAL, INC.
Balance Sheets
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
January 31, 1998
July 31, 1997 (Unaudited)
------------- ----------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 196,114 101,585
Accrued expenses 92,258 100,316
Income taxes payable - 6,579
Current installments of note payable - 10,908
-------------- -----------
Total current liabilities 288,372 219,388
Note payable, excluding current installments - 23,225
-------------- -----------
Total liabilities 288,372 242,613
-------------- -----------
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) (342,991)
Treasury stock - 39,600 shares (196,034) (196,034)
-------------- -----------
Total shareholders' equity 1,976,751 2,107,008
-------------- -----------
$ 2,265,123 2,349,621
============== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
TNR TECHNICAL, INC.
Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1998 1997 1998 1997
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $1,473,054 972,791 2,820,457 1,842,155
---------- ---------- ---------- ----------
Costs and expenses:
Cost of goods sold 1,060,430 722,133 2,109,051 1,367,128
Selling, general and administrative 263,102 216,975 531,276 448,160
---------- ---------- ---------- ----------
1,323,532 939,108 2,640,327 1,815,288
---------- ---------- ---------- ----------
Operating income 149,522 33,683 180,130 26,867
Non-operating revenue (expense):
Interest income 4,945 7,858 8,727 15,999
---------- ---------- ---------- ----------
Income before income taxes 154,467 41,541 188,857 42,866
Provision for income taxes 48,500 9,500 58,600 9,500
---------- ---------- ---------- ----------
Net income $ 105,967 32,041 130,257 33,366
========== ========== ========== ==========
Net income per common share $ .40 .12 .50 .13
========== ========== ========== ==========
Weighted average number of shares outstanding 261,981 262,422 261,981 262,422
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
TNR TECHNICAL, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
January 31,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 130,257 33,366
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 19,179 15,903
Deferred income taxes 47,500 7,000
Changes in operating assets and liabilities:
Accounts receivable (66,850) (33,853)
Income taxes receivable/payable 7,939 (622)
Inventories (16,025) (229,087)
Prepaid expenses and other assets (1,387) (33,573)
Accounts payable and accrued expenses (86,471) 134,775
--------- ---------
Net cash provided by (used in)
operating activities 34,142 (106,091)
--------- ---------
Cash flows from investing activities:
Purchases of short-term investments (24,029) (982,822)
Maturities of short-term investments -- 698,136
Purchase of property and equipment (69,324) (22,982)
Purchase of treasury stock -- (936)
--------- ---------
Net cash used in investing activities (93,353) (308,604)
--------- ---------
Cash flows from financing activities:
Process from issuance of note payable 35,198 --
Payment of principal on note payable (1,065) --
--------- ---------
Net cash provided by financing activities 34,133 --
--------- ---------
Decrease in cash and cash equivalents (25,078) (414,695)
Cash and cash equivalents - beginning of period 528,436 426,320
--------- ---------
Cash and cash equivalents - end of period $ 503,358 11,625
========= =========
</TABLE>
See accompanying notes to financial statements.
6
<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 January 31,
1998, and results of operations and cash flows for the three and six month
periods ended January 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 six months ended January 31, 1998 and 1997, no customer accounted for
more than 10% of total revenue.
(3) Inventories
Inventories consist of the following:
January 31, 1998
July 31, 1997 (Unaudited)
------------- ----------------
Finished goods $ 763,313 758,493
Purchased parts and materials 18,776 39,921
----------- -------
$ 782,389 798,414
=========== =======
7
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Working capital amounted to $1,831,038 at January 31, 1998 as compared
to $1,677,501 at July 31, 1997. Cash and short term investments amounted to
$555,419 at January 31, 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 six months ended January 31, 1998 and 1997 was $34,142 and $(106,091),
respectively. For the six months ended January 31, 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 account payables and accrued expenses. For the six months ended
January 31, 1998, cash was provided by operating activities as a result of the
Company=s net income partially offset by increases in accounts receivable and
inventory and decreases in accounts payable and accrued expenses. During the six
months ended January 31, 1998 and 1997, cash was used in investing activities
primarily 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 as of January 31, 1998.
Results of Operations
Net sales for the three months ended January 31,1998 were $1,473,054,
an increase of $500,263 or approximately 51% from the comparable period of the
prior year. Net sales for the six months ended January 31, 1998 were $2,820,457,
an increase of $978,302 or approximately 53% from the comparable period of the
prior year. These increases in sales for the three and six months ended January
31,1998 were due to increases in sales to existing and new customers primarily
as a result of expanding operations in California. During the six months ended
January 31, 1998 and 1997, no customer accounted for more than 10% of total
revenues. The Company's gross margin for the three months ended January 31, 1998
increased by approximately 2.2% as compared to the comparable period of the
prior year. The Company's gross margin for the six months ended January 31, 1998
decreased by approximately .6% as compared to the comparable period of the prior
year. The fluctuations in margins discussed herein resulted primarily from the
implementation of an aggressive pricing strategy beginning in the second quarter
of fiscal 1998 and, to a lesser degree, from changes in product mix.
8
<PAGE>
Operating (selling, general and administrative) expenses when expressed
as a percentage of net sales decreased approximately 4.4% for the three months
ended January 31, 1998 and approximately 5.5% for the six months ended January
31, 1998 as compared to the comparable periods of the prior year due primarily
to increased sales. 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 January 31, 1998 was $105,967 as
compared to $32,041 for the comparable period of the prior year. Net income for
six months ended January 31, 1998 was $130,527 as compared to $33,366 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 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.
9
<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:
On December 9, 1997, 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. Jerrold
Lazarus received 189,361 votes in favor and 3,285 votes against. Norman Thaw
received 192,419 votes in favor and 735 votes against. Wayne Thaw received
192,569 votes in favor and 585 votes against. Kathie Thaw received 136,258 votes
in favor and 56,866 against.
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 January 31, 1998 no report on
Form 8-K was filed or required to be filed.
10
<PAGE>
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.
Dated: March 9, 1998
/s/ Jerrold Lazarus
----------------------------------------
Jerrold Lazarus (Chairman of the Board,
Chief Executive Officer, Chief Accounting
and Financial Officer and Treasurer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> NOV-1-1997
<PERIOD-END> JAN-31-1998
<CASH> 555,419
<SECURITIES> 0
<RECEIVABLES> 658,392
<ALLOWANCES> 16,603
<INVENTORY> 798,414
<CURRENT-ASSETS> 2,050,426
<PP&E> 253,681
<DEPRECIATION> 80,680
<TOTAL-ASSETS> 2,349,621
<CURRENT-LIABILITIES> 219,388
<BONDS> 0
0
0
<COMMON> 6,032
<OTHER-SE> 2,100,976
<TOTAL-LIABILITY-AND-EQUITY> 2,349,621
<SALES> 1,473,054
<TOTAL-REVENUES> 1,477,999
<CGS> 1,060,430
<TOTAL-COSTS> 1,319,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,200
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 154,467
<INCOME-TAX> 48,500
<INCOME-CONTINUING> 105,967
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 105,967
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
</TABLE>
