SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended: September 30, 1999
Commission file number: 0-11882
TELECOMMUNICATION PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0916299
(state or other jurisdiction) (I.R.S. Employer
of incorporation or organization) Identification No.)
869 Moss Street, Golden, Colorado 80401
(address of principal executive offices)
Registrant's telephone number, including area code: (303)278-2725
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 the filing requirements
for at least the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date: 22,492,800 as of September 30, 1999.
Page 1 of 11 pages
ITEM 1 - FINANCIAL STATEMENTS
TELECOMMUNICATION PRODUCTS, INC.
Balance Sheets
ASSETS
Sept.30, 1999 March 31, 1999
------------- --------------
(unaudited) (unaudited)
Current assets:
Cash $ 399 $ -0-
Inventories (Note 3) 92,109 92,109
Other 238 238
-------- --------
92,746 92,347
-------- --------
Property and equipment, at cost:
Equipment 46,446 46,446
Office furniture and equipment 13,776 13,776
-------- --------
60,222 60,222
Less accumulated depreciation (59,852) (59,852)
-------- --------
370 370
-------- --------
$ 93,116 $ 92,717
======= ========
See accompanying notes to condensed
financial statements
TELECOMMUNICATION PRODUCTS, INC.
Balance Sheets
LIABILITIES AND STOCKHOLDERS' EQUITY
Sept.30, 1999 March 31, 1999
------------- --------------
(unaudited) (unaudited)
Current liabilities:
Accounts payable $16,128 $15,408
Accrued expenses
Officers 627,300 602,700
Other 28,757 28,757
-------- --------
Total current liabilities 672,185 646,865
Long Term Debt-Officers/Stockholders 2,805 1,979
Stockholders' equity: (Note 5)
Common stock, no par value
Authorized - 100,000,000 shares
Issued and outstanding -
22,492,800 shares 733,768 733,768
Preferred stock, $1 par value,
non-voting
Authorized - 50,000,000 shares
Issued - none
Accumulated deficit (1,315,642) (1,289,895)
------- -------
Total (581,574) (556,127)
------- -------
$ 93,116 $ 93,717
======= =======
See accompanying notes to condensed
financial statements
TELECOMMUNICATION PRODUCTS, INC.
Statement of Operations
(Unaudited)
three months ended three months ended
Sept. 30, l999 Sept. 30, 1998
--------------------------------------------
Revenues:
Sales $ -0- $ -0-
------- -------
Expenses:
Cost of Sales -0- -0-
Selling, general and
administrative 13,087 12,348
-------- --------
13,087 12,348
------- --------
Net (loss) $(13,087) $(12,348)
======== ========
Loss (Loss) per common share $ (.0006) $ (.0005)
======== ========
Weighted average common
shares outstanding 22,492,800 22,492,800
========== ==========
See accompanying notes to condensed
financial statements
TELECOMMUNICATION PRODUCTS, INC.
Statement of Operations
(Unaudited)
Six months ended Six months ended
Sept. 30, l999 Sept. 30, 1998
--------------------------------------------
Revenues:
Sales $ -0- $ -0-
------- -------
Expenses:
Cost of Sales -0- -0-
Selling, general and
administrative 25,747 24,669
-------- --------
25,747 24,669
------- --------
Net (loss) $(25,747) $(24,669)
======== ========
Loss (Loss) per common share $ (.0011) $ (.0013)
======== ========
Weighted average common
shares outstanding 22,492,800 22,492,800
========== ==========
See accompanying notes to condensed
financial statements
TELECOMMUNICATION PRODUCTS, INC.
Statement of Changes in Stockholder's Equity
(Unaudited)
Six months ended September 30, 1999
Common stock
---------------------- Accumulated
Shares Amount Deficit
---------- -------- ------------
Balance at March 31, 1999 22,492,800$733,768 ($1,289,895)
Net loss (unaudited) ( 25,747)
---------- -------- ----------
22,492,800 $733,768 ($1,315,642)
========== ======== ==========
See accompanying notes to condensed
financial statements
TELECOMMUNICATION PRODUCTS, INC.
Statement of Cash Flow
(Unaudited)
Six Six
months ended months ended
Sept. 30, 1999 Sept. 30, 1998
------------------ ------------------
Cash was provided by:
Increase (Decrease) in Accrued Expenses 24,600 24,445
Increase (Decrease) in Accounts Payable 720 -0-
Net Loans from Officers 826 450
------- -------
Total Cash Provided 26,146 24,895
------- -------
Cash was used for:
Net Loss 25,747 24,669
Increase (Decrease) in other
Current Assets 250
------ -------
Total Cash Used 25,747 24,919
------ ------
Beginning Cash Balance -0- 36
------- -------
Ending Cash Balance $ 399 $ 12
======= =======
See accompanying notes to condensed
financial statements
Notes to Condensed Financial Statements
(Unaudited)
1. The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions for Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. These
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Form 10-K for the year ended March
31, 1999.
2. Summary of Significant Accounting Policies
Telecommunication Products,Inc. (Company) was incorporated in the state
of Colorado on June 8, 1983, to design, manufacture and market specialized
communication equipment. The Company was in the development stage through
March, 1986, principally engaged in research and development activities.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in
the financial statements, during the quarter ended September 30, 1999, the
Company incurred a net loss of $25,747 and, as of that date, the Company has
accumulated a deficit of $1,289,895. This factor, among others, may
indicate that the Company will be unable to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount
and classification of liabilities that might be necessary should the Company
be unable to continue as a going concern. The Company's continuation as a
going concern is dependent upon its ability to generate sufficient cash flow
to meet its obligations on a timely basis, to obtain additional financing
as may be required, and ultimately to attain successful operations.
Management is of the opinion that enhanced marketing efforts will enable the
Company to increase revenues sufficiently to sustain operations.
3. Inventories
Inventories are recorded at the lower of cost (first-in first-out) or
market and consist of the following:
Sept.30, 1999 March 31, 1999
------------- --------------
Raw materials $ 55,176 $ 55,176
Work in process 36,933 36,933
Finished goods -0- -0-
-------- --------
$ 92,109 $ 92,109
======== ========
TELECOMMUNICATION PRODUCTS, INC.
Notes to Condensed Financial Statements
(Unaudited)
(Continued)
4. Common stock and warrants
In connection with a March 1984 public offering, the Company sold to
the underwriter for $100 warrants to purchase up to 644,280 shares of the
Company's no par value common stock. The warrants expired unexercised on
January 11, 1989.
5. Stock option plan
On June 8, 1983, the Company's Board approved an incentive stock option
plan for all employees and reserved 3,000,000 shares of common stock for
issuance upon the exercise of options granted. The minimum exercise price
under the plan is generally 100% of the fair market value of the Company's
common stock at the date of grant, and the options are exercisable for a
period up to 10 years from the grant date. For 10% stockholders, the
minimum exercise price is 110% of the fair market value at the date of
grant, and the options are exercisable for a period up to 5 years from the
date of grant. As of June 30, 1999, no options had been granted.
6. Loss per common share and shares outstanding
Loss per common share is computed by dividing net loss by the weighted
average shares outstanding during the period. The weighted shares
outstanding included 9,800,000 shares issued to certain persons at a price
substantially less than the public offering price. Outstanding warrants are
not included in the computation as their effect would be antidilutive.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Condition and Changes in Financial Condition
There was again a net loss for this quarter. This loss has continued
the erosion of the stockholders' equity, and such attrition may continue
through fiscal 2000. The Company had significant sales to customers in
Malaysia and Korea during fiscal 1995, and there appears to be continued
interest in these countries, which could, without assurance, result in
future sales.
Since its liquidity was enhanced in fiscal 1984 by a limited offering
of the Company's securities in August, 1983 for net proceeds of $218,055,
and an initial public offering of its common stock for net proceeds of
$493,394 on March 20, 1984, the Company's liquidity has declined due to the
initial expenditures required for research and development, and the time
involved in securing a market for the Company's products. There are no
present or planned commitments for material capital expenditures, and the
Company presently has no material unused sources of liquid assets.
There are continuing inquiries regarding the Company's products from
potential customers, and management believes that marketing efforts by Mr.
Ranniger and by its outside commissioned sales dealer and/or sales
representatives may continue to increase revenues, thus enabling the Company
to sustain operations. Due to the losses sustained by the Company during
its development stage and over the intervening years, the Company's ability
to remain a going concern depends upon its ability to generate sufficient
cash flow to meet its obligations, to obtain additional financing as may be
required, and to continue to increase its product sales. Even though the
Company has previously been unable to obtain outside conventional financing,
it has been able to continue as a going concern due to loans it has received
from officers, in addition to those officers deferring their respective
salaries since January 1987.
Results of Operations
The Company had no sales revenues again this quarter. However, the
Company has seen such highs and lows over the past years that the future is
difficult to project. For instance, although fiscal 1995 revenues were the
second highest annual revenues in the previous five year period, fiscal 1994
total revenues were among the lowest in the Company's history. The total
revenues for fiscal 1993 were almost nine times as great as those generated
in fiscal 1992, where sales were the lowest in its preceding five year
period, and fiscal 1991 revenues were the highest in the Company's history.
As a result, it is impossible to speculate as to what will happen in fiscal
2000. Ninety-eight percent of fiscal 1995 revenues, and 100% of fiscal 1994
and 1993 revenues, were generated via sales of the Company's Model 9100 and
related equipment.
The company has been working to upgrade its Model 9100 system with a
new diode which will increase the transmission power of the system from 1
watt power input to 1.2 and 2.4 optical power output, thereby increasing the
transmission range to over two miles in normal atmospheric conditions.
In addition, the Company is upgrading the data rate transmission
capabilities of the Model 9100. Presently, the Model 9100-2 is capable of
transmitting communication formats of DS-0 (64 kbps), DS-1 (1.544 mbps), and
the European standard CEPT HDB-3 (2.048 mbps). Upgrades would allow
transmission of additional data rates of OC-1 (51.84 mbps) and OC-2 (155.520
mbps). The present plans to accomplish these upgrades would utilize the
same castings, optics, mounts, and most other hardware, therefore reducing
the cost of the new design while greatly enhancing system features.
Other than the above, the Company does not expect any material changes
in the mix and relative cost of resources. Raw materials were previously
augmented in the anticipation of potential future demand in Asia. As of
year end, there were no finished goods in inventory. Inflation has had no
material effect on the Company's operations over the last three fiscal
years.
The Company's current cash requirement for payroll is down to zero, due
to the fact that the Company's only full time employees, Don and Clara
Ranniger, have elected to defer their salaries since January of 1987 in
order to help the Company's cash flow. The Company's former engineering
technician and another technician/consultant are presently available to work
as independent contractors for the Company on an as-needed basis.
Fiscal 2000 operations will continue to concentrate efforts on
increasing sales and production of the Model 9100. However, due to varying
economic conditions in the domestic and world-wide market for this product,
sales projections are difficult to estimate.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings pending or, to the
knowledge of the Company's management, threatened to which the Company is
a party or of which any of its property is the subject.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None.
(b) Reports on Form 8-K. None.
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.
TELECOMMUNICATION PRODUCTS, INC.
by _____________________________
Donald E. Ranniger, President
(principal financial officer and
chief executive officer)
November 12, 1999
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