UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Commission file number 0-12227
Sutron Corporation
(Exact name of registrant as specified in its charter.)
Virginia 54-1006352
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation organization)
21300 Ridgetop Circle, Sterling Virginia 20166
(Address of principal executive offices) (Zip Code)
(703) 406-2800
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $.01 Par Value - 4,225,851 shares of as of September 30, 1997.
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
SUTRON CORPORATION
BALANCE SHEETS
<CAPTION>
(Unaudited)
September 30, December 31,
1997 1996
___________ ___________
<S> <C> <C>
Assets
Current Assets:
Cash $35,828 $78,970
Accounts receivables 1,228,275 1,210,377
Cost and estimated earnings in excess
of billings 690,698 628,344
Inventory 1,803,484 2,135,231
Other 82,532 46,482
___________ ___________
Total Current Asset 3,840,817 4,099,404
Property, Plant, and Equipment,
less accumulated depreciation
and amortization of $1,119,550
and $1,072,273 207,974 182,995
Investment 493,118 493,118
Deposits and Other Assets 41,794 50,940
___________ __________
TOTAL ASSETS $4,583,703 $4,826,457
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 567,702 $895,524
Accrued expenses 656,255 457,065
Accrued income taxes 44,133
Contract billings on contracts in progress in
excess of costs and estimated earnings 162,702 162,702
Estimated losses on
uncompleted contracts 1,095 1,095
Line of credit 558,723 905,000
Shareholder loans payable 80,000 90,000
Installment notes payable - current portion 6,657 6,657
Term notes payable- current portion 171,504 300,000
_________ __________
Total Current Liabilities 2,248,771 2,808,043
Long-term liabilities:
Installment note payable 1,182 16,411
Term notes payable 143,311 166,222
_________ __________
Total liabilities 2,393,264 2,990,676
Stockholders' Equity:
Common stock, $.01 par value,
12,000,000 shares authorized;
4,225,851 shares issued and outstanding in 1997
and in 1996 43,540 43,540
Additional paid in capital 2,281,585 2,281,585
Accumulated Deficit (134,686) (489,344)
___________ ___________
Total Stockholders' Equity 2,190,439 1,835,781
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,583,703 $ 4,826,457
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
September 30,
1997 1996
___________ ___________
<S> <C> <C>
Revenues $ 2,311,053 $ 2,876,496
Cost of Goods Sold 1,532,069 1,726,369
___________ __________
Gross Profit 778,984 1,150,127
Research and Development Expenses 169,882 155,427
Selling, General, and
Administrative Expenses 446,474 520,850
___________ ___________
Income (Loss) from Operations 162,628 473,850
Interest Expense 23,386 46,333
Income (Loss) before Provision ____________ ___________
for Income Taxes 139,242 427,517
Provisions for Income Taxes 26,200 79,658
____________ ___________
Net Income (Loss) $ 113,042 $ 347,859
Net Income (Loss) per Common Share $.03 $.08
Weighted Average Number
of Common Shares 4,396,357 4,263,511
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1997 1996
___________ ___________
<S> <C> <C>
Revenues $ 7,152,408 $ 6,033,109
Cost of Goods Sold 4,544,011 3,588,052
___________ __________
Gross Profit 2,608,397 2,445,057
Research and Development Expenses 581,385 371,249
Selling, General, and
Administrative Expenses 1,410,397 1,268,637
___________ ___________
Income (Loss) from Operations 616,615 805,171
Interest Expense 99,758 123,281
Income (Loss) before Provision ____________ ___________
for Income Taxes 516,857 681,890
Provisions for Income Taxes 162,200 79,658
____________ ___________
Net Income (Loss) $ 354,859 $ 602,232
Net Income (Loss) per Common Share $.08 $.14
Weighted Average Number
of Common Shares 4,389,808 4,235,980
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
1997 1996
___________ ___________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 354,657 $ 602,232
Noncash items included in net income (loss):
Depreciation and amortization 76,782 79,393
Loss on sale of assets 1,961
(Increase) Decrease in:
Accounts receivables (17,898) 444,639
Costs and estimated earnings in excess of contract
billings (62,354) (349,041)
Inventory 331,747 (818,527)
Prepaid items and other (26,904) 22,371
Increase (Decrease) in:
Accounts payable (327,822) 168,678
Accrued expenses 243,323 200,859
Contract billings in excess of costs and earnings 0 (30,000)
Estimated losses on uncompleted contracts 0 (4,706)
Net Cash Provided (Used) by Operating Activities 573,492 315,898
Cash Flows from Investing Activities:
Purchase of property and equipment (47,049) (47,049)
Net Cash Used in Investing Activities (47,049) (47,049)
Cash Flows from Financing Activities:
Payments on line of credit (346,277) (5,000)
Payments on installment loans (15,229) (4,386)
Payments on stockholder loans 0 (10,000)
Payments on term notes payable (151,407) (175,000)
Net Cash (Used) Provided by Financing Activities (512,913) (194,386)
Net Increase (Decrease) in Cash and Cash Equivalents (43,142) 74,463
Cash and Cash Equivalents, January 1 78,970 49,899
Cash and Cash Equivalents, September 30 $35,828 $124,352
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
SUTRON CORPORATION
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
1. Basis of Presentation
The accompanying financial statements, which should be read in conjunction
with the financial statements of Sutron Corporation ("the Company") included
in the 1995 Annual Report filed on Form 10-KSB, are unaudited but have
been prepared in the ordinary course of business for the purpose of providing
information with respect to the interim period. The Company believes that all
adjustments (none of which were other than normal recurring accruals)
necessary for a fair presentation for such periods have been included.
2. Earnings Per Share
Earnings per share is computed on the basis of the weighted average number
of common shares outstanding plus the effect of outstanding stock options
using the "treasury stock" method.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Third Quarter 1997 Compared to 1996
Net Revenues. Sutron Corporation revenues for the quarters ended
September 30, 1997 and September 30, 1996 were $2,311,053 and
$2,876,496, respectively (a decrease of 20%). Sales to agencies of
the federal government and other domestic customers improved 16%
to $1,786,588 in 1997 from $1,538,794 in 1996, an increase of $247,793.
Third quarter revenues from contract's with the Air Force to deliver
FMQ-13 digital wind sensor spares and repairs increased to $186,724 in
1997 from $50,668 in 1996, an increase of $136,056. Revenues from
international contracts and projects decreased 74% to $337,741 in 1997
from $1,287,033 in 1996, a decrease of $949,292.
Gross Profit. The Company's gross profit for the quarter ended September
30, 1997 decreased 33% to $778,984 from $1,150,127 for September 30,
1996. The decrease in gross profit is attributed to installation problems
on our SIMEPAR contract in Brazil, test problems relating to an Air Force
repair contract for FMQ-13 wind sensors and reduced sales volume.
Selling, General And Administrative. Selling, general and administrative costs
decreased $74,376 to $446,474 for the quarter ended September 30, 1997 from
$520,850 in 1996. The decrease is primarily due to reduced agent commissions
relating to the decrease in international sales.
Research And Development. Research and development expenses increased
$14,020 to $169,882 for the quarter ended September 30, 1997 from $155,427
in 1996. Research and development expenses as a percentage of sales increased
to 7% in 1997 from 5% in 1996. The increase is due to a substantial increase
in product development activities. The Company is using outside research
and development companies to assist in new product development.
Nine months ended September 30, 1997 Compared to 1996
Net Revenues. Sutron Corporation revenues for the nine months ended
September 30, 1997 and September 30, 1996 were $7,152,408 and
$6,033,109, respectively (an increase of 19%). Sales to agencies of
the federal government and other domestic customers improved 49%
to $5,801,301 in 1997 from $3,893,648 in 1996, an increase of $1,907,652.
Revenues from contracts with the Air Force to deliver FMQ-13 digital wind
sensor spares and repairs increased to $362,974 in 1997 from $239,690 in
1996, an increase of $123,284. Revenues from international contracts
and projects decreased 48% to $988,133 in 1997 from $1,899,770 in 1996,
a decrease of $911,637.
Gross Profit. The Company's gross profit for the nine months ended
September 30, 1997 increased 6% to $2,608,397 from $2,445,057 for
September 30, 1996. Gross profit as a percentage of sales declined to 36%
in 1997 from 41% in 1996 relating to installation problems on our SIMEPAR
contract in Brazil and test problems relating to an Air Force repair contract
for FMQ-13 wind sensors.
Selling, General And Administrative. Selling, general and administrative
costs increased $141,760 to $1,410,397 for the nine months ended September
30, 1997 from $1,268,637 for the nine months ended September 30, 1996. The
increase is due to adding an international sales manager in mid 1996, a
marketing manager in late 1996, and higher international selling expenses.
Research And Development. Research and development expenses
increased 57% to $581,385 for the nine months ended September 30, 1997
from $371,249 in 1996. Research and development expenses as a percentage
of sales increased to 8% in 1997 from 6% in 1996. The increase is due to a
substantial increase in product development activities. The Company is using
outside research and development companies to assist in new product
development.
The Company's backlog of orders at September 30, 1997 was
approximately $2,762,000. The Company anticipates that 85% of its
September backlog will be shipped in 1997.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $35,828 at September 30, 1997,
compared to $78,970 at December 31, 1996.
The ratio of current assets to current liabilities was 1.7 as of
September 30, 1997, compared to 1.46 as of December 31, 1996. Working
capital increased $300,685 to $1,592,046 million at the end of the third
quarter of fiscal 1997 compared to $1,291,361 at the end of fiscal 1996.
Management believes internally generated funds and short-term
borrowings on our existing credit line will provide adequate resources
for supporting operations during the remainder of fiscal 1997.
Forward-Looking Statements
The Company believes that this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that are subject to certain risks and uncertainties. Forward-looking
statements represent the Company's expectations or beliefs concerning future
events, including the following: any statements regarding future sales and
gross profit percentages, any statements regarding the continuation of
historical trends, any statements regarding the sufficiency of the Company's
cash balances and cash generated from operating and financing activities for
the Company's future liquidity and capital resource needs, any statements
regarding the effect of regulatory changes, the success of development and
enhancement of the Company's products, the adequacy of the Company's
facilities, potential acquisitions, and any statements regarding the future of
the instrumentation industry and the various parts of the instrumentation
markets in which the Company conducts its business. The Company cautions
that any forward-looking statements made by the Company in this report
or in other announcements made by the Company are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements, including, without limitations, the
factors set forth in to the Company's report on Form 10K for the fiscal
year ended December 31, 1996.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
B. Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
<PAGE>
SUTRON CORPORATION
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.
Sutron Corporation
(Registrant)
November 14, 1997 Raul S. McQuivey
Date Raul S. McQuivey
Principal Executive Officer
November 14, 1997 Sidney C. Hooper
Date Sidney C. Hooper
Principal Accounting Officer
<SEQUENCE>2
[DESCRIPTION]STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Exhibit 11
Sutron Corporation
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30
1997 1996 1997 1996
___________ _________ _______ _______
<S> <C> <C> <C> <C>
Primary
Average shares outstanding 4,225,851 4,225,851 4,225,851 4,225,851
Net effect of dilutive stock options,
based on thetreasury stock method
using average market price 170,506 37,660 163,957 10,129
___________ ___________ ________ ________
Total 4,396,357 4,263,511 4,389,808 4,235,980
Net earnings $113,042 $347,859 $354,657 $602,232
Primary per share amounts $.03 $.08 $.08 $.14
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE>5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 35828
<SECURITIES> 0
<RECEIVABLES> 1228275
<ALLOWANCES> 0
<INVENTORY> 1803484
<CURRENT-ASSETS> 3840817
<PP&E> 1327524
<DEPRECIATION> 1119550
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<COMMON> 43540
0
0
<OTHER-SE> 2146899
<TOTAL-LIABILITY-AND-EQUITY> 4583703
<SALES> 7152408
<TOTAL-REVENUES> 7152408
<CGS> 4544011
<TOTAL-COSTS> 4544011
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 99758
<INCOME-PRETAX> 516857
<INCOME-TAX> 162200
<INCOME-CONTINUING> 354657
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<NET-INCOME> 354657
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
