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 March 31, 1998
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 March 31, 1998.
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
SUTRON CORPORATION
BALANCE SHEETS
<CAPTION>
(Unaudited)
March 31, December 31,
1998 1997
___________ ___________
<S> <C> <C>
Assets
Current Assets:
Cash $5,088 $168,548
Accounts receivables 1,089,608 1,804,525
Cost and estimated earnings in excess
of billings 205,444 402,523
Inventory 1,754,879 1,528,802
Other 122,251 71,670
___________ ___________
Total Current Asset 3,177,271 3,976,068
Property, Plant, and Equipment,
less accumulated depreciation
and amortization of $1,176,347
and $1,154,351 365,086 184,551
Investment 493,118 493,118
Deposits and Other Assets 53,478 38,746
___________ __________
TOTAL ASSETS $4,088,954 $4,692,483
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 667,898 $610,568
Accrued payroll 128,158 80,521
Accrued expenses 443,365 415,021
Accrued income taxes 18,326 110,359
Contract billings on contracts in progress in
excess of costs and estimated earnings 169,238 169,238
Estimated losses on
uncompleted contracts 13,976 24,902
Line of credit 0 573,171
Shareholder loans payable 55,000 80,000
Installment notes payable - current portion 6,277 6,657
Term notes payable- current portion 171,504 171,504
_________ __________
Total Current Liabilities 1,674,121 2,241,941
Long-term liabilities:
Installment note payable 0 253
Term notes payable 57,559 100,435
_________ __________
Total liabilities 1,731,680 2,342,629
Stockholders' Equity:
Common stock, $.01 par value, 42,259 42,259
Additional paid in capital 2,282,866 2,282,866
Retained Earnings 32,528 24,729
___________ ___________
Total Stockholders' Equity 2,357,653 2,349,854
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 4,088,954 $ 4,692,483
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1998 1997
___________ ___________
<S> <C> <C>
Revenues $ 1,809,749 $ 2,672,141
Cost of Goods Sold 1,108,488 1,581,736
___________ __________
Gross Profit 701,261 1,090,405
Research and Development Expenses 202,240 215,598
Selling, General, and
Administrative Expenses 480,951 447,279
___________ ___________
Income (Loss) from Operations 18,070 427,528
Other Expense 7,219 0
Interest Expense 13,802 38,194
Income (Loss) before Provision ____________ ___________
for Income Taxes (2,951) 389,334
Provisions for Income Taxes (10,750) 152,000
____________ ___________
Net Income $ 7,799 $ 237,334
Net Income per Common Share $.00 $ $ .06
Weighted Average Number
of Common Shares 4,225,851 4,225,851
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
1998 1997
___________ ___________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 7,799 $ 237,334
Depreciation and amortization 21,996 25,044
Loss on sale of assets 0 1,961
(Increase) Decrease in:
Accounts receivables 714,917 (310,885)
Costs and estimated earnings in
excess of contract billings 197,079 (199,814)
Inventory (226,077) 277,330
Other current assets (65,313) (46,551)
Increase (Decrease) in:
Accounts payable 57,330 (95,787)
Accrued expenses 75,981 1,727
Accrued income taxes (92,033) 126,650
Estimated losses on uncompleted
contracts (10,926) 0
__________ _______
Net Cash Provided by Operating Activities 680,753 17,009
Cash Flows from Investing Activities:
Proceeds from sale of assets 0 10,500
Capital expenditures (202,534) (33,629)
Net Cash Used in Investing Activities (202,534) (23,129)
Cash Flows from Financing Activities:
Payments on line of credit (573,171) 0
Proceeds from advance on line of credit 0 75,000
Payments on Term notes payable (42,876) (25,000)
Payments on Installment notes payable (633) (13,166)
Payments on shareholder notes (25,000) 0
___________ __________
Net Cash (Used) by Financing Activities (641,680) 36,834
Net Increase (Decrease) in Cash 163,461 30,714
Cash and Cash Equivalents, January 1 168,549 78,970
___________ __________
Cash and Cash Equivalents, March 31 $ 5,088 $ 109,684
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
SUTRON CORPORATION
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
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 1997 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
The Company has adopted Statement of Financial Accounting
Standards ("SFAS") No. 128 which establishes standards for
computing and presenting earnings per share (EPS) for entities
with publicly held common stock. The standard requires
presentation of two categories of earning per share, basic EPS
and diluted EPS. Basic EPS excludes dilution and is computed
by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for
the year. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings
of the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net Revenues. The Company's revenues for the three months
ended March 31, 1998 decreased 32% to $1,809,749 from
revenues of $2,672,141 in 1997 due to both decreased
product sales and decreased sales of services/systems.
The decrease in product sales is primarily a result
of decreased sales of the 8200, 8210 and 8400 products. A
strong backlog of these products was carried over into 1997.
Services revenues decreased as a result of overhead tasks relating
to new application software development being given priority
over direct work during the first quarter.
Gross Profit. Gross profit for 1998 decreased to $701,261 from
$1,090,405 in 1997. Gross margin as a percentage of revenues
for 1998 decreased to 39% as compared to 41% in 1997. The
decrease in the Company's gross margin as a percentage of sales
is attributed to reduced sales volume and to the Company
carrying certain contracts at no profit due to costs being in excess
of revenues. A loss provision totaling $24,902 was accrued for
these contracts at December 31, 1997.
Selling, General And Administrative. Selling, general
and administrative expenses increased to $480,951 in 1998
from $447,279 in 1997, an increase of $33,673. These expenses
increased as a percentage of revenues to 26% in 1998 from
18% in 1997. Both general and administrative expenses and
selling expenses increased due to increased labor charges.
Research And Development. Research and development expenses
decreased 6% to $202,240 in 1998 from $215,598 in 1997, a
decrease of $26,224. The Company is using subcontractors
to assist in the development of new products and incurred
significant costs in the prior year. The current work on new
products is being done primarily in house as the subcontractors
have completed the majority of their tasks. One new R&D
employee was added in March 1998.
Interest Expenses. Interest expenses decreased to $13,802 in 1998
from $38,194 in 1997 as a result of the company's reduced borrowings
on the line of credit due to strong profits in 1996 and 1997.
The Company's backlog of orders at March 31, 1998 was
$1,595,375. The Company anticipates that 95% of its
March backlog will be shipped in 1998.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $5,088 at March 31, 1998,
compared to $168,549 at December 31, 1997.
The ratio of current assets to current liabilities was 1.9 as of
March 31, 1998, compared to 1.8 as of December 31, 1997. Working
capital decreased $230,979 to $1,503,150 at the end of the first
quarter of fiscal 1997 compared to $1,734,129 at the end of fiscal 1997.
In February 1998, the Corporation entered into a contract to sell 4.2
acres of land acquired in 1986. The land was originally intended to
be the site of a headquarters and manufacturing facility. The contract
calls for a purchase price of $700,000 and the buyer has a study period
and a right to cancel. Settlement on the property is expected in the
third quarter of 1998.
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 1998.
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, 1997.
<PAGE>
PART II - OTHER INFORMATION
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)
May 15, 1998 Raul S. McQuivey
Date Raul S. McQuviey
Principal Executive Officer
May 15, 1998 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
March 31,
1998 1997
___________ _________
<S> <C> <C>
Basic EPS
Average shares outstanding 4,225,851 4,225,851
Net Income $7,799 $237,334
Net Income per common share $.00 $.06
Dilutive EPS
Average shares outstanding 4,225,851 4,225,851
Effect of dilutive securities 190,361 130,568
Total average shares outstanding 4,416,212 4,356,419
Net earnings $7,799 $237,334
Net income per diluted share $.0 $.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Article 5 Fin. Data Schedule for 1st Qtr 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 5088
<SECURITIES> 0
<RECEIVABLES> 1089608
<ALLOWANCES> 0
<INVENTORY> 1754879
<CURRENT-ASSETS> 3177271
<PP&E> 1541433
<DEPRECIATION> 1176347
<TOTAL-ASSETS> 4088954
<CURRENT-LIABILITIES> 1674121
<BONDS> 0
<COMMON> 42259
0
0
<OTHER-SE> 2315394
<TOTAL-LIABILITY-AND-EQUITY> 4088954
<SALES> 1809749
<TOTAL-REVENUES> 1809749
<CGS> 1108488
<TOTAL-COSTS> 1108488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13802
<INCOME-PRETAX> (2951)
<INCOME-TAX> (10750)
<INCOME-CONTINUING> 7799
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7799
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
