<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, 1999
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.
-------------------------------------------------------
(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 ___.
261,849 Common Shares, $.0001 par value were issued and outstanding at
January 31, 1999.
<PAGE>
TNR TECHNICAL, INC.
Index
Page
Number
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
January 31, 1999 (Unaudited)
and July 31, 1998 3-4
Statements of Operations
Three and six months ended
January 31, 1999 (Unaudited) and
January 31, 1998 (Unaudited) 5
Statements of Cash Flows
Six months ended
January 31, 1999 (Unaudited) and
January 31, 1998 (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
<PAGE>
TNR TECHNICAL, INC.
Balance Sheets
Assets
<TABLE>
<CAPTION>
January 31, 1999
July 31, 1998 (Unaudited)
------------- ----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 597,683 1,018,271
Short-term investments 167,181 82,562
Accounts receivable - trade, less allowance for doubtful
accounts of $19,300 and $22,885 599,504 602,281
Income taxes receivable -- --
Inventories 814,605 838,041
Prepaid expenses and other current assets 18,614 21,643
Deferred income taxes 23,000 20,000
--------- ---------
Total current assets 2,220,587 2,582,798
Deferred income taxes 69,000 --
Property and equipment, at cost, net of accumulated
depreciation and amortization 185,361 165,453
Deposits 13,845 13,701
---------- ---------
Total assets $2,488,793 2,761,952
========== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
TNR TECHNICAL, INC.
Balance Sheets
Liabilities and Shareholders' Equity
<TABLE>
<CAPTION>
January 31, 1999
July 31, 1998 (Unaudited)
------------- ----------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 88,964 226,916
Accrued expenses 75,220 77,600
Income taxes payable 23,989 9,952
Current installments of note payable 11,338 11,785
----------- -----------
Total current liabilities 199,511 326,253
----------- -----------
Note payable, excluding current installments 17,639 11,633
----------- -----------
Total liabilities 217,150 337,886
----------- -----------
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) (24,496)
Treasury stock - 39,630 and 39,859 shares (196,154) (197,471)
----------- -----------
Total shareholders' equity 2,271,643 2,424,066
----------- -----------
$ 2,488,793 2,761,952
----------- -----------
</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 1999 1998 1999
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
Revenues: $ 1,473,054 1,433,599 2,820,457 2,828,856
------------ ----------- ---------- ----------
Net sales
Costs and expenses:
Cost of goods sold 1,060,430 1,047,754 2,109,051 2,058,184
Selling, general and administrative 263,102 258,134 531,276 538,434
------------ ----------- ---------- ----------
1,323,532 1,305,888 2,640,327 2,596,618
------------ ----------- ---------- ----------
Operating income 149,522 127,711 180,130 232,238
Non-operating revenue (expense):
Interest income 4,945 10,539 8,727 17,738
Net unrealized gain (loss) on
short-term investments - 8,913 - (5,236)
------------ ----------- ---------- ----------
Income before income taxes 154,467 147,163 188,857 244,740
Provision for income taxes 48,500 58,000 58,600 91,000
------------ ----------- ---------- ----------
Net income $ 105,967 89,163 130,257 153,740
============ =========== ========== ==========
Net income per share $ 0.40 0.34 0.50 0.59
============ =========== ========== ==========
Weighted average number of shares outstanding 261,923 261,817 261,981 261,864
============ =========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
TNR TECHNICAL, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
January 31,
1998 1999
(Unaudited) (Unaudited)
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 130,257 153,740
Adjustments to reconcile net income to net cash
provide by operating activities:
Depreciation and amortization 19,179 26,189
Deferred income taxes 47,500 72,000
Net unrealized loss on short term investments -- 5,236
Changes in operating assets and liabilities:
Purchases of short term investments (24,029) (50,033)
Sale of short term investments -- 129,414
Accounts receivable (66,850) (2,777)
Income taxes receivable/payable 7,939 (14,037)
Inventories (16,025) (23,436)
Prepaid expenses and other assets (1,387) (2,885)
Accounts payable and accrued expenses (86,471) 140,334
---------- ----------
Net cash provided by (used in)
operating activities 10,113 433,745
---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (69,324) (6,281)
---------- ----------
Net cash used in investing activities (69,324) (6,281)
---------- ----------
Cash flows from financing activities:
Purchase of treasury stock -- (1,317)
Proceeds from issuance of note payable 35,198 --
Payment of principal on note payable (1,065) (5,559)
---------- ----------
Net cash provided by (used in) financing activities 34,133 (6,876)
---------- ----------
(Decrease) increase in cash and cash equivalents (25,078) 420,588
Cash and cash equivalents - beginning of period 528,436 597,683
---------- ----------
Cash and cash equivalents - end of period $ 503,358 1,018,271
========== ==========
</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,
1999, and results of operations and cash flows for the three and six month
periods ended January 31, 1999 and 1998. The results of operations are
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, 1999 and 1998, no customer accounted for
more than 10% of total revenue.
(3) Inventories
Inventories consist of the following:
January 31, 1999
July 31, 1998 (Unaudited)
-------- --------
Finished goods $790,982 813,739
Purchased parts and materials 23,623 24,302
-------- --------
$814,605 838,041
======== ========
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Working capital amounted to $2,256,545 at January 31, 1999 as compared
to $2,021,076 at July 31, 1998. Cash and short term investments amounted to
$1,100,833 at January 31, 1999 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 provided by operating activities for the six
months ended January 31, 1999 and 1998 was $433,745 and $10,113, respectively.
For the six months ended January 31, 1999, cash was provided by operating
activities as a result of the Company's net income, sale of short-term
investments and increases in accounts payable and accrued expenses, partially
offset by purchases of short-term investments and increases in inventories. 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, 1999 and 1998, cash was used
in investing activities to acquire additional 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 January 31, 1999.
Results of Operations
Net sales for the three months ended January 31,1999 were $1,433,599, a
decrease of $39,455 or approximately 3% from the comparable period of the prior
year. Net sales for the six months ended January 31, 1999 were $2,828,856, an
increase of $8,399 or approximately .3% from the comparable period of the prior
year. These changes in sales for the three and six months ended January 31,1999
were primarily due to changes in sales of product mix. During the six months
ended January 31, 1999 and 1998, no customer accounted for more than 10% of
total revenues. The Company's gross margin for the three months ended January
31, 1999 decreased by approximately 1.1% as compared to the comparable period of
the prior year. The Company's gross margin for the six months ended January 31,
1999 increased by approximately 2.0% 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.
Operating (selling, general and administrative) expenses when expressed
as a percentage of net sales remained relatively unchanged for the three months
and six months ended January 31, 1999 as compared to the comparable periods of
the prior year. During the past three years, the Company did not charge its
operations with any research and development costs.
8
<PAGE>
Net income for the three months ended January 31, 1999 was $89,163 as
compared to $105,967 for the comparable period of the prior year. Net income for
six months ended January 31, 1999 was $153,740 as compared to $130,257 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:
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 January 31, 1999 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.
--------------------------------------
(Registrant)
Dated: March 9, 1999
/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> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 1,018,271
<SECURITIES> 82,562
<RECEIVABLES> 625,166
<ALLOWANCES> 22,885
<INVENTORY> 838,041
<CURRENT-ASSETS> 2,582,798
<PP&E> 300,280
<DEPRECIATION> 134,827
<TOTAL-ASSETS> 2,761,952
<CURRENT-LIABILITIES> 326,253
<BONDS> 0
6,032
0
<COMMON> 0
<OTHER-SE> 2,418,034
<TOTAL-LIABILITY-AND-EQUITY> 2,761,952
<SALES> 1,433,599
<TOTAL-REVENUES> 1,453,051
<CGS> 1,047,754
<TOTAL-COSTS> 253,934
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,200
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 147,163
<INCOME-TAX> 58,000
<INCOME-CONTINUING> 89,163
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,163
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
