SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended March 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None
Name of each exchange on which registered: Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(title of class)
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 ___
Aggregate market value of the voting stock held by non-affiliates of
the registrant as of April 5, 1996: $224,928 (based on information supplied by
the National Quotation Bureau, and calculating the weighted average of the
lowest bid prices for the stock in fiscal 1996 to be $.01 per share).
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 May
28, 1999.
Documents incorporated by reference: None.
Exhibit index on page 9 Page 1 of 19
<PAGE>
PART I
Item 1. Business.
Telecommunication Products, Inc. (the "Company") was incorporated in
Colorado on June 8, 1983, and successfully completed an initial public offering
of its common stock on March 20, 1984. It is engaged in the design, manufacture,
and marketing of specialized communication equipment. As of May 28, 1998, the
Company employed two persons, with an additional two people available as
contract labor as needed.
Products
Model 9100 Infrared Laser Communication Link. The Model 9100 has been
designed to permit the transmission of up to 2.048 million bits per second of
asynchronous data for up to 6km. The Model 9100-2B is an upgrade of the Model
9100-2 system. The Model 9100-2B has a peak optical power output of 2.4 watts.
The Model 9100-2 previously manufactured and sold by TELPRO had a peak power
input to the transmitter laser diode of 1.0 watt. The previously-offered Model
9100-2 system was offered for applications of up to 2.5 miles. The Model 9100-2B
infrared laser communication link has an upgrade system gain of 7 db which is
anticipated to increase the "line of sight" path distance capabilities to
approximately 5 miles. In order to improve the reliability of the Model 9100-2B,
this system has been designed to operate from an uninterruptable 48vdc power
source or an uninterruptable 115/230vac - 50/60hz primary power source. This
system is being marketed as an alternative to microwave or fiber optics
communication systems in specific applications. There is no requirement to
obtain property easements for burial of fiber or other type cable.
The upgraded Model 9100-2B infrared laser system capable of 2.048mbps is
competitively priced to 18ghz microwave operating with a T1 (1.544mbps) data
transmission capability. The specific market target is for microcell
interconnection of cellular or PCS networks. It is anticipated the availability
of FCC licensing for 18 and 23Ghz microwave frequencies space will become more
difficult due to the frequency congestion in metropolitan areas. There is no
requirement for FCC licensing for infrared laser communication links.
The Model 9100 has been tested by the Company in a variety of conditions
(-40 to +140 degrees F, and winds up to 86 mph), with a bit error rate in
unfaded weather conditions of approximately 10-11, which translates to
error-free transmission during 99.9985% of running time, compared with microwave
transmission which averages only 85% of running time error-free. The results of
these propagation studies have been published in electronic trade journals and
presented at many trade shows. Customers for this product range from government
and governmental agencies to private industry and foreign corporations.
Presently, systems have been sold to customers in Mexico, Canada, Indonesia,
Malaysia, and Korea, in addition to the U.S. The Model 9100 is designed to be
versatile, and can be adapted for specialized applications, such as the
transmission of video signals. This product can also interface with both digital
fiber optic and digital microwave systems.
Sales of the Model 9100 and related equipment accounted for 98% of total
revenues in fiscal 1995, 100% of total revenues in fiscal 1994, and 100% in
fiscal 1993.
The company is currently designing an upgrade of a TELPRO atmospheric laser
communication link to directly interface with fiber optic communication systems
operating at OC-3 (155mbps) protocol. The TELPRO atmospheric laser transmission
link will be compatible with large telecommunication company fiber optic systems
where authorization to bury or use aerial fiber cables over streets, highways or
rivers is either not available or cost prohibitive. We envision the sale of many
thousand links (at approximately $40,000 per link) for atmospheric laser,
fiber-optic compatible applications for limited distance interconnections with
fiber-optic systems.
Model 1001 Series Converter. This product had an established sales record
for the Company, but had a small specialize travel agency market, and in fact
contributed nothing to revenues in the last three fiscal years. As a result,
this product is no longer being offered by TELPRO.
Other Products and Services. In the event a prospective customer has
particular needs for telecommunications or similarly related technology
equipment, the Company from time to time will specially design and manufacture a
made-to-order device. Although this area accounted for only 2% of revenues in
1995, and no revenues in the previous two fiscal years, it generated 29% of
total revenues in fiscal 1992.
2
<PAGE>
Sales, Markets, and Competition
The Company sells its products through Mr. Ranniger and outside entities,
sales and sales representatives for territories including Alaska, Arizona,
California, Texas, Hawaii, Idaho, Louisiana, Montana, Nevada, Oregon,
Washington, New Mexico, Washington D.C., Virginia, and Maryland.
Internationally, the Company has been approached by individuals/entities
interested in representing the Company's products in Korea, Malaysia, and
Russia. As of May, 1998, the Company has an exclusive representative agreement
for Korea with a firm there which anticipates a continued market for the
Company's products in that country. The agreements with the sales
representatives for domestic territories, which were signed on and after the
spring of 1985, may be terminated by either party on 30 days notice, and are
non-exclusive. The Company operates solely out of its Golden, Colorado facility,
and all information regarding assets and operating profit and loss is addressed
in the accompanying financial statements. As of March 31, 1999 and the date of
this report, the Company has no material backlog of orders.
The Company has had no sales revenues for the past three fiscal years.
Therefore, it has had no sales to unaffiliated customers during the past three
fiscal years, nor has it had sales in excess of 10% to any individual customers
over the past three-year period. The Company's revenues depend on its ability to
continue to expand its client base.
The Company competes generally with a number of other manufacturers of
telecommunications equipment. System design and engineering, and component
technical features are the principal methods of competition.
Miscellaneous
As is customary in the telecommunications industry, the Company produces
its products from readily available components purchased from a variety of
manufacturers. Printed circuit boards and housings are contracted for
manufacture according to Company specifications from among many available
suppliers. The business of the Company is not seasonal. The Company maintains no
special arrangements relating to working capital items, and as far as it is
aware this is standard in the industry. Its inventory as of March 31, 1999 was
$92,109. The Company is not subject to environmental protection regulations
during the foreseeable future. The Company has spent nothing on research and
development in the last three fiscal years. Patents have not appeared to be
important to the industry, and as of December 1990 the Company's patent expired.
None of the Company's present business is subject to renegotiation of profits or
termination of contracts or subcontracts at the election of the government.
Item 2. Properties.
The Company is located at 869 Moss Street, Golden, Colorado 80401, and the
capacity of the Company's facilities and production equipment is adequate for
present activities.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Company's Common Stock is traded on the over-the-counter market. The
Company has not had any revenues which could be used to pay for updates on these
figures since fiscal year ended 3/31/96; however, the ranges of high and low bid
quotations for each fiscal quarter for the fiscal years ended 3/31/96 and
3/31/95 as reported by National Quotation Bureau, Incorporated, are as follows:
3
<PAGE>
1995 High Low
---- ---- ---
First Quarter (4/l through 6/30/94) .001 .001
Second Quarter (7/l through 9/30/94) .001 .001
Third Quarter (10/1 through 12/31/94) .001 .001
Fourth Quarter (1/1 through 3/31/95) .001 .001
1996 High Low
---- ---- ---
First Quarter (4/l through 6/30/95) .001 .001
Second Quarter (7/l through 9/30/95) .001 .001
Third Quarter (10/1 through 12/31/95) .001 .001
Fourth Quarter (1/1 through 3/31/96) .001 .001
The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down, or commission, and may not necessarily represent actual transactions.
As of March 31, 1999, there were approximately 378 record holders of the
Company's Common Stock.
The Company has not paid dividends on its Common Stock and does not
anticipate paying dividends in the foreseeable future. The Company anticipates
that all earnings will be retained for development of the Company's business.
The underwriter for the initial public offering, Norbay Securities, Inc.,
of Bayside, New York, is no longer in business. The Company is unaware as to
whether a market is still being made in the Company's stock by any brokerage
firms.
Item 6. Selected Financial Data.
Financial Condition:
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current assets $ 92,347 $ 92,145 $ 92,765 $ 94,355 $ 98,958
Total Assets 92,717 93,642 95,379 98,666 105,549
Long Term Debt 24,774
Stockholders'
(deficiency) (556,127) (495,931) (442,304) (388,985) (332,913)
equity
</TABLE>
Results of Operations:
<TABLE>
<CAPTION>
Year ended March 31,
------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total revenues $ 0 $ 0 $ 0 $ 0 $136,085
Selling, general &
administrative 60,196 53,407 53,019 54,540 77,446
Cost of sales 0 220 300 1,532 64,030
Net loss (60,196) (53,627) ( 53,319) ( 56,072) ( 9,400)
Loss per share ( .0027) ( .0024) ( .0024) ( .0026) (.0004)
Net cash flows
from operating ( 1,000) ( 1,413) ( 1,235) ( 11,645) 43,438
activities
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition and Changes in Financial Condition
The Company had no revenues in fiscal 1999, 1998, 1997, or 1996; this was a
tremendous contrast to fiscal 1995 revenues. As a result, there was again a net
loss for the year. 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.
4
<PAGE>
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
Fiscal 1999 was the fourth year of all-time low revenues for the Company.
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.
5
<PAGE>
Item 8. Financial Statement and Supplementary Data.
Index to Financial Statements:
1. Compilation Report
2. Financial Statements
a. Balance Sheets as of March 31, 1999 and 1998;
b. Statements of Operations for the years ended March 31, 1999,
1998, and 1997;
c. Statements of Stockholders' Deficiency for the years ended March
31, 1999, 1998, and 1997;
d. Statements of Cash Flows for the years ended March 31, 1999,
1998, and 1997; and
e. Notes to Financial Statements for the years ended March 31, 1999,
1998, and 1997.
3. Schedule IV - Indebtedness to Related Parties
Item 9. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosure.
None.
PART III
Principal Security Holders
The following table sets forth information, as of May 28, 1999, with respect to
the beneficial ownership of Common Stock by each person known by the Company to
be the beneficial owner of more than five percent of the outstanding Common
Stock, by all directors and nominees of the Company, and by directors and
officers of the Company as a group:
Shares beneficially owned
------------------------------------
Name of Person or Identity of Group Number %
------------------------------------ --------- -----
Donald E. and Clara H. Ranniger (1) 7,610,000 33.8%
Travis K. Pethe (2) --- ---
Harry D. Thompson (2) --- ---
Daniel P. Newman (2) --- ---
Five directors and officers 7,610,000 33.8%
- ---------------
(1) Directors, officers, and controlling persons of the Company. Their
address is 869 Moss Street, Golden, Colorado 80401.
(2) Director
Identification of Directors, Executive Officers, Committees, and Related Matters
The Company elects less than the entire Board of Directors annually. The
Board of Directors is divided into three classes. Each class holds office until
the second annual meeting succeeding their election. Officers of the Company
hold office until the next annual meeting of the Board of Directors immediately
following the next annual meeting of shareholders or until removal by the Board
of Directors.
The names of each director and officer, and certain other information about
them are set forth below:
Name Age Title
- ----------------------- --- -----------------------------------
Class 1 Directors:
Harry D. Thompson 66 Director
Daniel P. Newman 48 Director
Class 2 Directors:
Travis K. Pethe 47 Director
Class 3 Directors:
Donald E. Ranniger 71 Chairman of the Board of Directors,
President, and Treasurer
Clara H. Ranniger 71 Vice President, Secretary, Director
6
<PAGE>
Harry D. Thompson, a director since August 6, 1985, has been self-employed
as a public accountant since June 1970. He provides services to clients in
manufacturing, construction, retail, service and other businesses in connection
with establishing and maintaining accounting books and records, taxes, financial
reporting, budgeting, management reporting, job costing and financing. The
Company made no payments to Mr. Thompson during his last fiscal year, and
expects to make payments to Mr. Thompson of less than ten percent of his gross
revenues during his current fiscal year. Mr. Thompson holds a bachelors degree
in Business Administration from the University of Denver.
Daniel P. Newman, a director since April 26, 1995, has been a practicing
attorney for thirteen years. He received his Juris Doctor degree from the
University of Denver in June, 1986. Presently, Mr. Newman is employed as an
Appeals Referee for the State of Colorado, where he conducts public hearings on
appealed unemployment compensation claims. Mr. Newman defines the issues,
questions witnesses, evaluates the evidence, applies appropriate regulations,
rules and law, and renders a complete written decision which is final unless
appealed to the Industrial Commission. Mr. Newman also has a Bachelor of Arts
degree with a major in Psychology from the University of Pennsylvania. In
addition, Mr. Newman has a variety of practical business experience.
Travis K. Pethe, a director since September 21, 1983, was employed by
Omnitech Robotics, Inc. as Vice President of Engineering. Previously, he ran his
own consulting business after leaving Total Petroleum, Inc. as the Corporate
Safety Manager since 1992, where he was responsible for planning,
implementation, and oversight of the company's product safety, process safety,
occupational safety, and transportation safety programs. From 1979 to 1992, Mr.
Pethe was employed by Martin Marietta Astronautics Group, Denver, Colorado, as a
manager in system safety, management information systems, and technical
operations. From 1974 to 1979, he was a commissioned officer in the United
States Air Force. Mr. Pethe is a 1974 graduate of the United States Air Force
Academy with a B.S. degree in engineering mechanics and a 1976 graduate of the
University of Utah with a master's degree in engineering administration. He is a
member of the National Society of Professional Engineers and the American
Society of Mechanical Engineers. He expects to devote only so much of his time
to the business activities of the Company as may be necessary. It is
contemplated that he may act as a contract consultant to the Company from time
to time, on product safety and liability prevention matters. The terms of any
such consulting arrangement have not been determined.
Donald E. Ranniger, Chairman of the Board of Directors, President, and
Treasurer since June 8, 1983, is employed by the Company full time. He has been
president and co-owner of Ranniger Systems, Inc., an affiliate of the Company,
since July 1981. Since 1969, Ranniger Systems, Inc. and its predecessor, a sole
proprietorship, have engaged in the design, manufacture, and marketing of
specialized communication equipment, including infrared voice and data
communication links, current converters, and digital/voice response systems.
They have also engaged in a manufacturer's representative business. The design
and manufacturing portion of their operations was transferred to the Company on
June 8, 1983. From July 1959 to March 1963, and again from June 1966 to April
1969, he was a major accounts manager for General Electric Co., where he was
responsible for sales of microwave and data processing equipment in a five-state
area. He was a district sales manager for Raytheon Co. from March 1963 to June
1966. Mr. Ranniger was employed from October 1955 to July 1959 by Collins Radio
Co. as a field project engineer. Mr. Ranniger graduated in 1950 from Central
Institute, Kansas City, Missouri. He is a member of the Rocky Mountain Inventors
Congress and has been issued a U.S. patent. He holds an FCC general radio
license and is a certified engineer by the National Association of Radio &
Telecommunications Engineers. He is a Senior Member of the Institute of
Electrical and Electronics Engineers. Mr. Ranniger is the husband of Clara
Ranniger.
Clara H. Ranniger, Vice President, Secretary, and a director since June 8,
1983, has been vice president and co-owner of Ranniger Systems, Inc., an
affiliate of the Company, since July 1981. Her responsibilities with Ranniger
Systems, Inc. included the preparation of bids for government contracts and
maintaining the books and records of the corporation. She was associated with
Mr. Ranniger in the operations of its predecessor, a sole proprietorship, from
August 1974 to July 1981. Mrs. Ranniger is employed by the Company full time,
and handles all administrative work for the Company, including purchasing,
day-to-day accounting, quality control documentation, inventory, customer and
shareholder relations.
7
<PAGE>
The Board of Directors has a standing audit committee consisting of Clara
H. Ranniger and Harry D. Thompson, both of whom are directors. Functions of the
audit committee are: engagement or discharge of auditors; prior approval of each
professional service provided by the auditors; determining fees; reviewing the
audit plan; reviewing internal accounting controls; reviewing the adequacy of
financial and accounting personnel; reviewing the results of the audit; and
reviewing financial information and press releases concerning financial matters
prior to dissemination. The audit committee meets monthly to review the
financial statements of the Company, as evidenced by the minutes of such
meetings in the Company minute book.
The Board of Directors has a standing nominating committee consisting of
Messrs. Ranniger, Pethe, Thompson, and Mrs. Ranniger. The functions of the
committee are to propose nominees for positions on the Board of Directors and to
monitor the procedures set forth in the Articles of Incorporation for
nominations. These procedures provide, in relevant part, that nominations for
the election of directors by shareholders will be considered if they are
submitted in writing not less than 14 days nor more than 50 days prior to any
annual meeting of shareholders. The written notice must contain specific
information about the nominee as required by the Articles of Incorporation.
There is no compensation committee; similar functions are performed by the
Board of Directors.
Management Remuneration and Transactions
The following table sets forth the cash compensation paid to all officers
and directors of the Company as a group for services rendered during the fiscal
year ended March 31, 1998 (no officer received cash compensation in excess of
$60,000):
No. Persons in Group Capacities in which served Cash Compensation
- -------------------- -------------------------- -----------------
Five Officers and directors $ .00 *
* Mr. & Mrs. Ranniger have deferred payout of their salaries since January,
1987, which deferment amounts to $602,700 through the end of the fiscal year
ended March 31, 1999. Mr. & Mrs. Ranniger are still owed outstanding interest of
$12,909.17 due from prior loans to the Company, which has not been paid to date,
as well as the principal sum of $1,979.24 with additional accruing interest,
which was loaned to the Company in the past fiscal years.
The Company proposes to continue the employment of Mr. and Mrs. Ranniger as
officers of the Company at their monthly salaries of $2,500 and $1,600
respectively. Mr. Thompson has provided, and it is proposed that he continue to
provide, accounting services to the Company at his customary hourly rates for
bookkeeping and for preparation of financial reports. In addition, each director
is paid up to $100 plus reasonable expenses for attendance at each Board of
Directors' meeting, although the Directors decided to defer this stipend for all
meetings during the fiscal years 1988 through 1999.
The shareholders of the Company adopted an incentive stock option plan (the
"Plan") on June 8, 1983. The Plan provides for the granting, in the discretion
of the Board of Directors, to the officers and employees of the Company of
options (the "Options") to purchase up to 3,000,000 shares of Common Stock. The
Options are to be exercisable at the fair market value of the Common Stock on
the date of grant, or 110% of such fair market value if the amount of stock
owned by the optionee is more than 10% of the total combined voting power of all
classes of capital stock of the Company as of the date of grant. The Options are
to be exercisable for a period of not longer than ten years from the date of
grant, and the Plan expired June 8, 1993. No Options have been granted or
exercised under the Plan since its adoption.
There was no other remuneration paid or distributed to or accrued
for the account of the officers and directors of the Company for services to the
Company for the last fiscal year or other proposed remuneration, including
payments proposed to be made in the future pursuant to any on-going plan or
arrangement to officers and directors of the Company, besides that already
stated.
The Company has no other pension or retirement plans, or annuities.
<PAGE>
PART IV
Item 14. Exhibits and Financial Statement Schedules, and Reports
on Form 8K.
A. The following documents are filed as a part of this report:
1. Financial Statements
a. Balance Sheets as of March 31, 1999 and 1998;
b. Statements of Operations for the years ended March 31, 1999,
1998, and 1997;
c. Statements of Stockholders' Deficiency for the years ended March
31, 1999, 1998, and 1997;
d. Statements of Cash Flows for the years ended March 31, 1999,
1998, and 1997; and
e. Notes to Financial Statements for the years ended March 31, 1999,
1998, and 1997.
2. Schedule IV, Indebtedness to Related Parties. Besides Schedule IV,
which is attached, all other schedules are omitted, as the required
information is included in the financial statements or notes thereto.
3. Exhibits:
<TABLE>
<CAPTION>
Form 10-K
Regulation S-K consecutive
exhibit number Exhibit page number
-------------- --------------------------------------------- -----------
<S> <C> <C> <C>
3.1 Articles of Incorporation (incorporated N/A
by reference to Exhibit 3.1 of the
Company's Registration Statement on Form
S-18, Registration No. 2-86781-D)
3.2 Bylaws (incorporated by reference to N/A
Exhibit 3.2 of the Company's Registration
Statement on Form S-18, Registration No.
2-86781-D)
10.1 Building Lease (incorporated by reference N/A
to Exhibit 10.2 of the Company's Form 10-K
for the fiscal year ended March 31, 1984)
10.2 Patent Assignment (incorporated by reference N/A
to Exhibit 10.2 of the Company's Registration
Statement on Form S-18, Registration No.
2-86781-D)
10.3 Incentive Stock Option Plan (incorporated by N/A
reference to Exhibit 10.5 of the Company's
Registration Statement on Form S-18,
Registration No. 2-86781-D)
10.4 Assignment of Products, Ranniger Systems, N/A
Inc., as assignor, and the Company, as
assignee (incorporated by reference to
Exhibit 10.6 of the Company's Registration
Statement on Form S-18, Registration No.
2-86781-D)
28.1 U.S. Patent No. 3,778,616 (incorporated N/A
by reference to Exhibit 28.1 of the
Company's Registration Statement on Form
S-18, Registration No. 2-86781-D)
</TABLE>
B. During the last quarter of its fiscal year ended March 31, 1999, the
Company filed no reports on Form 8-K.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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:/s/ Don E. Ranniger
---------------------------
Don E. Ranniger, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
May 28, 1999 By:/s/ Don E. Ranniger
-----------------------------------
Don E. Ranniger,
Chairman of the Board of Directors,
President and Treasurer
May 28, 1999 By:/s/ Clara H. Ranniger
-----------------------------------
Clara H. Ranniger, Director and
Vice President and Secretary
May 28, 1999 By:/s/ Travis K. Pethe
-----------------------------------
Travis K. Pethe, Director
May 28, 1999 By:/s/ Harry D. Thompson
-----------------------------------
Harry D. Thompson, Director
May 28, 1999 By:/s/ Daniel P. Newman
-----------------------------------
Daniel P. Newman, Director
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
10
<PAGE>
COMPILATION REPORT
To the Stockholders
Telecommunication Products, Inc.
Golden, Colorado
In accordance with the United States Securities and Exchange Commission
Regulation S-X paragraph 210.3-11, the Company has compiled the accompanying
balance sheets of Telecommunication Products, Inc. as of March 31, 1999 and
1998, and the related statement of operations and stockholders' deficiency and
statement of cash flows, with notes to financial statements, for the years ended
March 31, 1999, 1998, and 1997.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations and net
stockholders' deficiency raise doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
A compilation is limited to presenting in the form of financial
statements accounting information and records kept by the Company. The Company
has not audited the accompanying financial statements and is not in a position
to express an opinion or any other form of assurance on them.
Golden, Colorado
May 28, 1999
F-1
<PAGE>
TELECOMUNICATIONS PRODUCTS, INC.
BALANCE SHEETS (Unaudited)
MARCH 31, 1999 AND 1998
(See Management's Compilation Report)
<TABLE>
<CAPTION>
ASSETS 1999 1998 LIABILITIES AND STOCKHOLDERS' DEFICIENCY 1999 1998
- ------ ---- ---- ---------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS CURRENT LIABILITES
Cash $ -- $ 36 Accounts payable $ 15,408 $ 6,250
Accounts receivable -- Accrued liabilities:
Inventories (note 3) 92,109 92,109 Officers (Note 2) 602,700 553,500
Prepaid expense 238 -- Other 28,757 28,808
------- -------- -------- --------
Total current assets 92,347 92,145
------- -------- Total current liabilities 646,865 588,558
PROPERTY AND EQUIPMENT, AT COST:
Equipment 46,446 46,446 LONG TERM DEBT - officers/stockholders
Office furniture and plans 13,776 13,776 (Note 2) 1,979 1,015
------- --------
Total 60,222 60,222
Less accumulated depreciation 59,852 58,725 STOCKHOLDERS' DEFICIENCY (Note 4):
------- -------- Preferred stock, nonvoting, $1 par
Net property and equipment 370 1,497 value: 50,000,000 shares authorized;
------- -------- no shares issued
Common stock, no par value; 100,000,000
shares authorized; 22,492,800 shares
issued and outstanding 733,768 733,768
Accumulated deficit (1,289,895) (1,229,699)
Total stockholders' deficiency (556,127) (495,931)
---------- ----------
TOTAL $92,717 $ 93,642 TOTAL $ 92,717 $ 93,642
======= ======== ========== ==========
</TABLE>
See notes to financial statements
F-2
<PAGE>
TELECOMMUNICATION PRODUCTS, INC.
STATEMENTS OF OPERATIONS (Unaudited)
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- ------------------------------------------
(See Managements' Compilation Report)
1999 1998 1997
---- ---- ----
REVENUES:
Net sales $ - $ - $ -
------------- ------------- -----------
Total revenues - - -
------------- ------------- -----------
EXPENSES:
Cost of sales - 220 300
Selling, general and
administrative (Note 2) 60,196 53,407 53,019
------------- ------------- -----------
Total expenses 60,196 53,627 53,319
------------- ------------- -----------
NET LOSS $ (60,196) $ (53,627) $ (53,919)
============= ============= ===========
NET LOSS PER COMMON SHARE $ (.0027) $ (.0024) $ (.0024)
============= ============= ===========
WEIGHTED-AVERAGE COMMON
SHARES OUTSTANDING 22,492,800 22,492,800 22,492,800
============= ============= ===========
See notes to financial statements
F-3
<PAGE>
TELECOMMUNICATION PRODUCTS, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Unaudited)
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- -----------------------------------------------------
(See Managements' Compilation Report)
<TABLE>
<CAPTION>
Common Stock
---------- --------- Accumulated Total
Shares Amount Deficit
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1996 22,492,800 $733,768 $(1,122,753) $(388,985)
Net loss (Unaudited) (53,319) (53,319)
---------- -------- ----------- ---------
BALANCE AT MARCH 31, 1997 22,492,800 $733,768 $(1,176,072) $(442,304)
Net loss (Unaudited) (53,627) (53,627)
---------- -------- ----------- ---------
BALANCE AT MARCH 31, 1998 22,492,800 $733,768 $(1,229,699) $(495,931)
Net loss (Unaudited) (60,196) (60,196)
---------- -------- ----------- ---------
BALANCE AT MARCH 31, 1999 22,492,800 $733,768 $(1,289,895) $(556,127)
========== ======== =========== =========
</TABLE>
See notes to financial statements
F-4
<PAGE>
TELECOMMUNICATION PRODUCTS, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
YEARS ENDED MARCH 31 1999 1998 AND 1997
- ------------------------------------------
(See Managements' Compilation Report)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (60,196) $ (53,627) $ (53,319)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization 1,127 1,117 1,697
Increase (decrease) in assets
and liabilities:
Accounts receivable
Inventories
Prepaid expenses (238) 222 355
Accounts payable 9,158 1,935
Accrued liabilities 49,149 48,940 50,032
--------- ---------- ---------
Net cash flows from operating
activities (1,000) (1,413) (1,235)
--------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for property and equipment - - -
--------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing under long-term debt
and note payable 964 1,015 -
Principal payments of long-term
debt and note payable - - -
--------- ---------- ---------
Net cash flows from financing
activities 964 1,015 -
--------- ---------- ---------
NET INCREASE (DECREASE) IN CASH (36) (398) (1,235)
CASH, BEGINNING OF YEAR 36 434 1,669
--------- ---------- ---------
CASH END OF YEAR $ - $ 36 $ 434
========= ========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for interest expense $ - $ - $ -
</TABLE>
See notes to financial statements
F-5
<PAGE>
TELECOMMUNICATION PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
- --------------------------------------------
(See Managements' Compilation Report)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Telecommunication Products, Inc. (Company) was
incorporated in the State of Colorado on June 8, 1983, to design,
manufacture and market specialized communication equipment.
Going-Concern Basis - 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 year ended
March 31, 1999, the Company incurred a net loss of $ 60,196 and1 as of
that date, the Company has an accumulated deficit of $1,289,895 and a
net stockholders' deficiency of $556,127. These factors among others,
may indicate that the Company will be unable to continue as a going
concern. The financial statements do not include any adjustments that
may 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.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property and Equipment and Depreciation - Depreciation is provided
using the straight-line method over an estimated useful live of five
years.
Revenue Recognition - Revenue is recognized when products are
delivered and accepted by customers.
Warranty Reserve - The Company grants a one-year warranty on parts and
labor for all of its products. The Company has historically experienced
minimal warranty claims.
Net Loss Per Common Share - Net loss per common share is computed by
dividing net loss by the weighted average common shares outstanding
during the period.
F-6
<PAGE>
2. RELATED-PARTY TRANSACTIONS
One of the Company's directors provides monthly accounting services to
the Company. Expenses for such services were $ -0- $ -0- and $ -0-, for
1999, 1998 and 1997 respectively.
Certain officers/stockholders of the Company elected to defer their
salaries beginning the first quarter of calendar year 1987 in order to
help the Company's cash flow. Unpaid compensation expenses of $49,200
annually were incurred in each of the three years in the period ended
March 31, 1999 and as of March 31, 1999 and 1998, unpaid compensation
to officers/stockholders totaled $602,700 and $553,500, respectively.
Long-tern debt - officers/stockholders represents an unsecured note
payable with interest at 0%. During the years ended March 31, 1999,
1998 and 1997, interest expense of $ 0, $ 0, and $ 0 respectively, was
incurred on the note and, at March 31, 1999 and 1998 accrued interest
of $12,909 and $12,909 was payable.
3. INVENTORIES
Inventories consist of the following at March 31:
1999 1998
---- ----
Raw materials $ 55,176 $ 55,176
Work in process 36,933 36,933
Finished goods - -
--------- ---------
Total $ 92,109 $ 92,109
========= =========
4. COMMON STOCK
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
March 31, 1999, no options have been granted.
F-7
<PAGE>
5. INCOME TAXES
At March 31, 1999 the Company has accumulated net operating loss
carryforwards of approximately $ 792,685 which may be utilized to
offset future taxable income and which expire through the year 2013.
The Company has investment tax credit carryforwards of approximately
$3,196 which expire through the year 2001. Additionally, the Company
has research and development tax credit carryovers of approximately
$16,261 which expire through the year 2002,' accordingly the Company
has made no provision for income taxes.
Pursuant to the Tax Reform Act of 1986, net operating losses utilized
in future income tax returns may be subject to alternative minimum tax
regulations which may limit up to 10% of the net operating loss
carryforward applied in a given year.
F-8
<PAGE>
TELECOMMUNICATION PRODUCTS, INC.
(See Managements' Compilation Report)
SCHEDULE IV - INDEBTEDNESS TO RELATED PARTIES (Unaudited)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1999
- ------------------------- Balance at Balance
Beginning Additions Deductions at End
------------ ----------- ------------ ---------
Notes payable to shareholders-
<S> <C> <C> <C> <C>
Donald E. and
Clara H Ranmiger* 1,015 964 1,979
YEAR ENDED MARCH 31, 1998
- ------------------------- Balance at Balance
Beginning Additions Deductions at End
------------ ----------- ------------ ---------
Notes payable to shareholders-
Donald E. and
Clara H.Ranniger* - 1,015 1,015
YEAR ENDED MARCH 31, 1997
- ------------------------- Balance at Balance
Beginning Additions Deductions at End
------------ ----------- ------------ ---------
Notes payable to shareholders-
Donald E. and
Clara H Ranniger* - - - -0-
</TABLE>
* Made to maintain operations.
F-9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 92,109
<CURRENT-ASSETS> 92,347
<PP&E> 60,222
<DEPRECIATION> 59,852
<TOTAL-ASSETS> 92,717
<CURRENT-LIABILITIES> 92,717
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (1,289,895)
<TOTAL-LIABILITY-AND-EQUITY> 92,717
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,909
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,196)
<EPS-BASIC> (.003)
<EPS-DILUTED> 0
</TABLE>
