U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-12866
ANTENNA PRODUCTS, INC.
(fka Cabre Corp)
(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
(State or other jurisdiction of
incorporation or organization) (IRS Employer Identification No.)
1209 Orange St., Wilmington, Delaware 19801
(Address of principal executive offices)
(302) 658-7581
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 1,950,428 as of February
29, 2000.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 29, 2000 and May 31, 1999
ASSETS
February 29, 2000 May 31, 1999
(Unaudited) (Audited)
----------------- ------------
Current assets:
Cash and cash equivalents $ 432,519 $ 270,175
Accounts receivable:
Trade, net of allowances for
doubtful accounts of $7,021
each year 843,047 1,077,917
United States Government 138,325 210,360
Cost in excess of billings 75,494 -
Inventories 2,858,346 2,638,172
Prepaid expenses and other assets 36,851 33,368
Income taxes receivable 59,661 186,212
Deferred income taxes 65,880 65,880
----------- -----------
Total current assets 4,510,123 4,482,084
Property and equipment, net 2,344,129 2,386,918
Intangible assets 1,832,991 -
Intercompany Receivables/Payables - -
Intercompany-Antenna Acquisition Corp - -
Intercompany Investments - -
Total Assets $ 8,687,243 $ 6,869,002
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,228,663 $ 1,300,000
Current portion of long-term debt 298,535 48,535
Accounts payable 429,850 247,407
Accrued expenses 227,647 323,489
Income taxes payable - -
----------- -----------
Total current liabilities 2,184,695 1,919,431
----------- -----------
Long-term debt, less current portion 2,301,182 846,900
Note payable to shareholder, less
current portion 800,000 800,000
Deferred income taxes 460,462 460,462
----------- -----------
Total long-term liabilities 3,561,644 2,107,362
----------- -----------
Total liabilities 5,746,339 4,026,793
----------- -----------
Commitments and contingencies - -
Minority Interest in Subsidiary: - -
Shareholders' equity
Preferred stock, $1.00 par,
2,000,000 shares authorized, no
shares issued and outstanding. - -
Common stock, $0.01 par, 8,000,000
shares Authorized. 1,950,428 and
1,862,928 issued and outstanding
respectively 19,505 18,630
Additional paid in capital 2,142,576 1,995,951
Minority interest - -
Retained earnings 778,823 827,628
Total shareholders' equity 2,940,904 2,842,209
---------- ----------
$8,687,243 $6,869,002
========== ==========
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Nine Months Ended Three Months Ended
Feb 29, 2000 Feb 28, 1999 Feb 29, 2000 Feb 28, 1999
------------ ------------ ------------ ------------
Sales and contract
revenues $4,376,885 $5,887,954 $1,558,694 $1,737,821
Cost of sales and
contracts 3,119,805 4,318,805 1,083,784 1,265,710
----------- ----------- ----------- -----------
Gross profit 1,257,080 1,569,149 474,910 472,111
Sales and
administrative
expenses 1,137,708 874,371 430,777 312,229
---------- ---------- --------- ---------
Operating profit 119,372 694,778 44,133 159,882
---------- ---------- --------- ---------
Other income(expense):
Interest expense (176,916) (189,533) (68,654) (57,497)
Interest income 30 3,300 (887) 1,818
Other 8,509 6,475 3,059 1,569
---------- ---------- --------- ---------
Total other income
(expense) (168,377) (179,758) (66,482) (54,110)
----------- ----------- --------- ----------
Income (loss) before
taxes (49,005) 515,020 (22,349) 105,772
Provision for income
taxes - 175,200 - 35,200
----------- ----------- ---------- ---------
Income (loss) from
continuing
Operations before
minority interest (49,005) 339,820 (22,349) 70,572
Minority interest in
subsidiary's loss 200 - - -
Net income (loss) $ (48,805) $ 334,614 $ (22,349) $ 70,572
=========== ========== =========== =========
Earnings (loss) per
common share:
Continuing operations $ (0.03) $ .18 $ (0.01) $ .04
----------- ---------- ----------- ---------
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
February 29, 2000 February 28, 1999
----------------- -----------------
Cash flows from operating
activities:
Net income $ (48,805) $ 334,614
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation & amoritization 228,866 187,320
Changes in assets and
liabilities:
Accounts receivable 306,905 254,469
Cost in excess of billings (75,494) -
Inventory (220,174) (55,987)
Prepaid expenses (3,483) (11,760)
Accounts payable and accrued
expenses 86,601 (429,662)
Income taxes 126,551 22,515
--------- -----------
Net cash provided by operating
activities 400,967 301,509
--------- -----------
Cash flows from investing activities:
Issuance of stock 147,500 -
Tangibles from acquisition of
Upholstery Shop (1,844,068) -
Purchase of equipment from
The Upholstery Shop (175,000) (11,092)
----------- ------------
Net cash used in investing activities (1,871,568) -
Cash flows from financing activities:
Net borrowings (payments) under
bank line of credit (71,337) (245,000)
Purchase of treasury stock - (9)
Principal payments on long term debt 1,750,000 -
Proceeds from long term debt 45,718 (28,369)
----------- -----------
Net cash (used in) provided by
financing activities 1,632,945 (273,378)
----------- -----------
Net increase in cash and cash
equivalents 162,344 17,039
Cash and cash equivalents at
beginning of period 270,175 221,041
---------- -----------
Cash and cash equivalents at end
of period $ 432,519 $ 238,080
========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest (none capitalized) $ 176,916 $ 189,533
Income taxes - 150,000
See accompanying notes to consolidated financial statements.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-QSB instructions and in the opinion of
management contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position as of February
29, 2000, the results of operations for the nine months ending February 29,
2000 and February 28, 1999, and the cash flows for the nine months ended
February 29, 2000 and February 28, 1999. These results have been
determined on the basis of generally accepted accounting principles and
practices applied consistently with those used in the preparation of the
Company's audited financial statements for its fiscal year ended May 31,
1999.
2. Business
Antenna Products, Inc. operates as a "Holding" company with Antenna
Products Corporation, API Acquisition Corp., and Thirco, Inc. as its
subsidiaries. Antenna Products Corporation and API Acquisition Corp. are
operating subsidiaries with Thirco, Inc. serving as an equipment leasing
company to Antenna Products, Inc.'s operating units.
Antenna Products Corporation
- - ----------------------------
Antenna Products Corporation designs, manufactures and markets standard and
custom antennas, guyed and self supported towers, monopoles, support
structures, masts and communication accessories worldwide. Customers
include the U.S. Government, both military and civil agencies, U.S.
Government prime contractors and commercial clients. Examples of Antenna
Products Corporation's U.S. Government supplied products include ground to
air collinear antennas, instrument landing antennas and towers, fixed
system multi-port antenna arrays, tactical quick erect antennas and masts,
shipboard antenna tilting devices, transport pallets, surveillance
antennas, antenna rotators, positioners and controls, and high power
broadcast baluns. Examples of the company's commercial products include
panel, sector, omnidirectional and closed loop telecommunications antennas,
automatic meter reading (AMR), instrument scientific medical (ISM),
cellular, paging and yagi antennas, guyed towers, self supported towers
and monopoles.
API Acquisition Corp.
- - ---------------------
API Acquisition Corp. is an 80% owned subsidiary of Antenna Products, Inc.
It was formed on January 24, 2000 as a Texas corporation. API Acquisition
Corp., purchased the assets and business of The Upholstery Shop, Inc. on
January 27, 2000. The assets purchased included the machinery and
equipment. No land or buildings were included as part of this acquisition.
API Acquisition Corp. currently does business as The Upholstery Shop
at the existing facility under a lease agreement.
The Upholstery Shop provides complete refurbishment for a full range
of corporate and executive aircraft interiors. The range and scope of
these services include design and fabrication of seats, side panels,
headliners, galleys and cabinets, as well as the design and installation of
custom lighting, entertainment systems and cabin management systems. The
Upholstery Shop can also install upgraded avionic systems such as Navigational
Systems (NANs), Communication Systems (COMs), Auto Pilots (ADFs),
Distance Measuring Equipment (DME), Collision Avoidance Systems (TCAS),
and storm scopes.
The Upholstery Shop removes existing interiors of aircraft and installs new
interiors designed to customer specifications and coordinates the
refurbishment of exteriors for customers when required. The Upholstery
Shop provides this service on virtually all executive and corporate class
aircraft, including, but not limited to: Lear, Cessna, Gulfstream, Galaxy,
Dassault, and Bombardier. The refurbishments are diverse with the lower
range being minor upgrading of Lear 25's to total interior upgrading of the
larger aircraft of the Gulfstream and Falcon family.
Thirco, Inc.
- - ------------
Thirco, Inc. was formed on November 1, 1993 as a Delaware company to
purchase and lease equipment and facilities to the other operating units of
Antenna Products, Inc. The primary lease arrangements are with Antenna
Products. Thirco will occasionally assist in servicing the banking needs
of Antenna Products, Inc.'s operating units. Since all activity is
internal to Antenna Products, Inc. and its operating subsidiaries,
financial data is consolidated with Antenna Products, Inc. Thirco does not
employ any full time employees and does not intend to employ any in the
foreseeable future. Thirco does not intend to engage in any outside
business transactions.
Seasonality
- - -----------
Antenna Products, Inc.'s businesses are not dependent on seasonal factors.
Backlog
- - -------
The backlog of orders on March 31, 2000 at Antenna Products Corporation
amounted to approximately $4.1 million. The backlog of orders on March 31,
2000 at API Acquisition Corp. amounted to approximately $1.9 million.
3. Inventories
The major components of inventories are as follows:
February 29, 2000 May 31, 1999
Raw materials $ 515,420 $ 646,355
Work in process 2 ,049,431 1,523,201
Finished goods 293,495 468,616
------------- -------------
$ 2,858,346 $ 2,638,172
============ =============
4. Notes Payable
At February 29, 2000 notes payable consist of a revolving note payable to a
bank, maximum amount $3,000,000, interest payable monthly at the prime rate
plus 1% until September 30, 2000, when any unpaid principal and interest
shall be due.
Prime rate was 8.75% at February 29, 2000 and 7.75% at February 28, 1999.
Borrowings under the revolving note payable are collateralized by accounts
receivable and inventories and cannot exceed an amount determined by a
formula based upon the amount of certain qualified receivables and
inventories as defined in the loan agreement. At February 29, 2000,
available borrowings under this credit facility were limited to the
borrowing base amount of $2,081,221. Borrowings are guaranteed by a
principal shareholder and the Company must maintain a minimum tangible net
worth of $2,000,000 and working capital of not less than $1,000,000.
5. Long-Term Debt
At February 29, 2000 and February 28, 1999, long-term debt consists of the
following:
2000 1999
---- ----
Subordinated note payable to a principal shareholder.
In the initial years only interest (at the prime
rate) is payable with monthly principal payments
scheduled to begin in June 2002 and maturing in
May 2007. $ 800,000 $ 800,000
Note payable to a bank, guaranteed 80% by a U.S.
Government Agency, payable $8,900 per month,
including interest at the prime rate plus 1/2%;
collateralized by certain real estate and
fixtures and guaranteed by a principal shareholder;
the Company is required to maintain $1,500,000
in working capital and $1,000,000 in equity. $ 864,782 $ 905,904
Note payable to a bank, payable $28,724 per
month, including interest at the prime rate plus
1%; collateralized by certain equipment and
guaranteed by Antenna Products, Inc. and
otherwise secured by a pledge of assets of Antenna
Products, Inc. subsidiaries; the Company is
required to maintain $1,000,000 in working capital
and $1,500,000 in equity. $1,734,935 $ 0
---------- ---------
$3,399,717 $1,705,904
========== ==========
6. Shareholders Equity
Stock options for 47,500 shares valued at $95,000 were exercised by William
Poulin, President of Antenna Products, Inc., in the third quarter.
7. The Upholstery Shop, Inc., Acquisition
On January 27, 2000 API Acquisition Corp., a Texas corporation and 80%
owned subsidiary of Antenna Products, Inc., purchased the assets and
business of The Upholstery Shop, Inc., a Texas corporation for the amount
of $2,000,000. The acquisition was recorded as a purchase transaction
and the operations of The Upholstery Shop have been included in these
financials from the date of acquisition.
The Upholstery Shop has provided complete refurbishment for a full range of
corporate and executive aircraft interiors for over 12 years. The
Upholstery Shop's revenue for fiscal year 1999 ending December 31 was
$3,632,538 with net profits of $422,158.
API Acquisition Corp will do business as The Upholstery Shop.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OPERATION AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial condition and operating
results for the period included in the accompanying financial statements.
Results of Operations
- - ---------------------
Third Quarter Ended February 29, 2000 Compared to Third Quarter Ended February
28, 1999
The Company recorded a net loss of $22,349 for the quarter ended February 29,
2000 compared to a net profit of $70,572 for the quarter ended February 28,
1999. The loss in the third quarter was the result of the increase in
administrative expenses for legal and professional fees required during the
acquisition of The Upholstery Shop, Inc., a profitable aircraft interior
refurbishment business. The assets and business of The Upholstery Shop, Inc
were purchased on January 27, 2000.
Sales for the third quarter of fiscal year 2000 were $1.6 million, up from
$1.3 million in the second quarter of fiscal year 2000. Sales for the third
quarter of fiscal year 1999 were $1.7 million. The gross profit margin for the
third quarter was 30% compared to 27% for the third quarter of last year. The
Company's operating margin for the third quarter of fiscal year 2000 was 3%
compared to 9% in the third quarter of fiscal year 1999.
As stated previously, sales and administrative expenses were higher in the
third quarter of fiscal year 2000, $431 thousand versus $312 thousand in the
third quarter of fiscal year 1999. Sales and administrative expenses as a
ratio to sales were 28% in the third quarter of this year compared to 18% in
the same period last year.
Interest expense in the third quarter of fiscal year 2000 was $69 thousand
versus $57 thousand in the same time period of fiscal year 1999.
The Company's backlog totaled $4.7 million on February 29, 2000. This
included $4.0 million at Antenna Products Corporation and $700 thousand at API
Acquisition Corp. The Company's backlog totaled $4.1 million on February 28,
1999.
During the third quarter, a new 90 degree ISM sector antenna was developed at
Antenna Products Corporation. The antenna has a frequency range of 2.4 - 2.5
GHz and is rated for 300 watts of continuous RF power in a 19.2 dBd gain
configuration. The demand for ISM, AMR and other data transmittal antennas
continued to improve during the third quarter. $126 thousand of data
transmittal antennas were shipped during the third quarter of fiscal year 2000
and orders for an additional $118 thousand of the antennas have been released
to manufacturing and are currently in production. More information on new
products at Antenna Products Corporation is available on the Internet web page
at://WWW.antennaproducts.com.
Also during the third quarter, API Acquisition Corp. began conducting business
as The Upholstery Shop. Brian Perryman, former owner and manager of The
Upholstery Shop retained an equity position in API Acquisition Corp.
and was elected Vice President and General Manager responsible for day to day
operations of the new Company. Demand for the services provided at The
Upholstery Shop was strong in February and the Company will have to
operate at maximum capacity in the fourth quarter to accommodate the
increasing backlog of customer orders.
Nine Months Ended February 29, 2000 Compared to Nine Months Ended February 28,
1999
- - ------------------------------------------------------------------------------
The Company recorded a net loss of $48,805 for the nine month period ending
February 29, 2000 compared to a net profit of $334,614 in the same nine month
period of 1999. Sales were $4.4 million in the first nine months of fiscal
year 2000, compared to $5.9 million of sales in the first nine months of
fiscal year 1999. The gross profit margin for the first nine months was 29%
compared to 27% for the first nine months of last year. Sales and
administrative expenses as a ratio to sales were 26% in the first nine months
of this year compared to 15% in the same period last year. The Company's
operation margin for the first nine months of the fiscal year 2000 was 3%
compared to 12% in the first nine months of fiscal year 1999. In the first
nine months of this year, warranty costs averaged less than 2% of sales,
$64,023 compared to $84,592 in the same period last year. Discretionary
products development spending was $124,462, or 3% of sales, compared to
$213,303, or 4% of sales for the comparable period last year.
Liquidity and Capital Resources
- - -------------------------------
The Company's current assets total $4,510,123 as of February 29, 2000 with
$3,915,212 in inventory and accounts receivable. Receivables are $1,056,866
at the quarter ending February 29, 2000 compared to $1,087,111 at fiscal 1999
year-end. Net inventories have increased from $2,638,172 at May 31, 1999 to
$2,858,346. Cash accounts have increased $162,344 from May 31, 1999. There
were nominal capital additions during this period. Current liabilities of the
Company increased $265,264 from fiscal year end due to the acquisition of The
Upholstery Shop in January.
Management believes that cash flows from operations of the operating
subsidiaries and current cash balances, together with available lines of
credit, will be sufficient to fund operations and expenses for the near and
mid term future. The Company at February 29, 2000 had $871,000 remaining in
loan availability against this revolving credit line On September 30, 1999,
Antenna Products renewed its annual working credit line of $3.0 million with
loan advances subject to a borrowing base formula applied to inventory and
receivable balances.
Year 2000 Readiness
- - -------------------
As of the date of this report, Antenna Products has not
experienced any problems with computer software or hardware recognizing year
2000 dates. Since none of the products sold by the Company are at risk for
Year 2000 compliance, no problems have been reported and none are expected.
All of the computer numerical controlled (CNC) machines in the manufacturing
areas made the transition to the year 2000 without difficulty. Antenna
Products is not aware of any vendor difficulties due to problems
associated with the recognition of year 2000 dates.
Management believes that the costs of addressing any future difficulties
associated with this issue will not materially affect the financial position
or results of operation of the Company. Antenna Products plans to commit the
resources required to resolve any significant Year 2000 issues, if they occur,
in a timely manner.
ANTENNA PRODUCTS, INC. AND SUBSIDIARIES
PART II-OTHER INFORMATION
Item 6.
(b) Reports on Form 8-K.
On February 10, 2000 the registrant filed a Form 8-K for the
purpose of disclosing that API Acquisition Corp., a Texas
Corporation and 80% owned subsidiary of Antenna Products, Inc.
purchased the assets and business of The Upholstery Shop, Inc.
on January 27, 2000. The financial statements for The Upholstery
Shop, Inc., and the pro forma financial statements were not
available for inclusion with the report.
On April 12, 2000 the registrant filed a Form 8-K/A for the
purpose of filing the financial statements of The Upholstery
Shop, Inc. and the pro forma financial statements Antenna
Products, Inc./The Upholstery Shop, Inc. The financial statements
filed were:
(1) Financial Statements of The Upholstery Shop, Inc.
Independent Auditor's Report dated March 25, 2000
Balance Sheets as of December 31, 1999 and 1998
Statements of Income for the Years Ended December 31, 1999
and 1998
Statements of Stockholders' Equity for the Years Ended
December 31, 1999 and 1998
Statements of Cash Flows for the Year Ended December 31,
1999 and 1998
Notes to Financial Statements
(2) Pro Forma financial statements Antenna Products, Inc./The
Upholstery Shop, Inc.
Unaudited Pro Forma Condensed Balance Sheets as of
November 30, 1999
Unaudited Pro Forma Condensed Statements of Income
for the Six Months Ended November 30, 1999
Unaudited Pro Forma Condensed Statements of Income for
the Year Ended May 31, 1999
SIGNATURE
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.
Antenna Products, Inc.
Date: April 14, 2000 s/o/f:
Clark D. Wraight, Vice President
and Principal Financial Officer
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] MAY-31-2000
[PERIOD-END] FEB-29-2000
[CASH] 432,519
[SECURITIES] 0
[RECEIVABLES] 981,372
[ALLOWANCES] 0
[INVENTORY] 2,858,346
[CURRENT-ASSETS] 4,510,123
[PP&E] 2,344,129
[DEPRECIATION] 228,866
[TOTAL-ASSETS] 8,687,243
[CURRENT-LIABILITIES] 2,184,695
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 19,505
[OTHER-SE] 2,921,399
[TOTAL-LIABILITY-AND-EQUITY] 8,687,243
[SALES] 4,376,885
[TOTAL-REVENUES] 4,376,885
[CGS] 3,119,805
[TOTAL-COSTS] 1,137,708
[OTHER-EXPENSES] 8,539
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 176,916
[INCOME-PRETAX] (49,005)
[INCOME-TAX] 0
[INCOME-CONTINUING] (48,805)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (48,805)
[EPS-BASIC] (.03)
[EPS-DILUTED] (.03)
</TABLE>
