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 June 30, 1999
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 - 4,298,351 shares of as of June 30, 1999.
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
SUTRON CORPORATION
BALANCE SHEETS
<CAPTION>
(Unaudited)
June 30, December 31,
1999 1998
___________ ___________
<S> <C> <C>
Assets
Current Assets:
Cash $85,254 $76,204
Accounts receivables 1,662,678 1,761,262
Cost and estimated earnings in excess
of billings 612,785 1,136,910
Inventory 2,499,736 1,828,240
Other 247,489 368,870
___________ ___________
Total Current Asset 5,107,942 5,171,486
Property, Plant, and Equipment,
less accumulated depreciation
and amortization of $1,288,947
and $1,241,053 613,563 536,111
Deposits and Other Assets 20,238 36,734
___________ __________
TOTAL ASSETS $5,741,743 $5,744,331
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $705,867 $752,286
Accrued payroll 82,126 106,848
Accrued expenses 475,368 732,655
Accrued income taxes 123,525 -
Contract billings on contracts in progress in
excess of costs and estimated earnings - 117,192
Estimated losses on uncompleted contracts 11,673 11,673
Line of credit 587,215 650,571
Shareholder loans payable - 55,000
Current maturities of long-term notes 25,000 28,410
_______ ______
Total Current Liabilities 2,010,773 2,454,635
Long-term liabilities:
Long-term notes payable 62,500 75,000
_________ __________
Total liabilities 2,073,272 2,529,635
Stockholders' Equity:
Common stock, $.01 par value, 42,984 42,984 Additional paid in capital 2,316,236 2,316,236
Retained Earnings 1,309,250 855,476 ___________ ___________
Total Stockholders' Equity 3,668,470 3,214,696
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $5,741,743 $5,744,331
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
1999 1998
___________ ___________
<S> <C> <C>
Revenues $ 3,058,634 2,084,978
Cost of Goods Sold 1,667,260 1,338,971
_________ __________
Gross Profit 1,391,374 746,007
Research and Development Expenses 241,991 250,136
Selling, General, and
Administrative Expenses 609,568 508,626
___________ ___________
Income (Loss) from Operations 539,815 (12,755)
Other Income - 193,946
Interest Expense 9,028 14,887
Income (Loss) before Provision ____________ ___________
for Income Taxes 530,787 166,304
Provisions for Income Taxes 184,000 (245,595)
____________ ___________
Net Income (Loss) $ 346,787 $ 411,899
Net Income (Loss) per Common Share $ .08 $ $.10
Weighted Average Number
of Common Shares 4,298,351 4,225,851
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1999 1998
___________ ___________
<S> <C> <C>
Revenues $ 5,593,824 $3,894,727
Cost of Goods Sold 3,196,332 2,447,459
___________ __________
Gross Profit 2,397,492 1,447,268
Research and Development Expenses 470,413 452,376
Selling, General, and
Administrative Expenses 1,215,960 989,577
___________ ___________
Income from Operations 711,119 5,315
Other Income 7,682 186,727
Interest Expense 20,163 28,689
Income before Provision ____________ ___________
for Income Taxes 683,274 163,353
Provisions for Income Taxes 229,500 (256,345)
____________ ___________
Net Income $ 453,774 $ 419,698
Net Income (Loss) per Common Share $.11 $.10
Weighted Average Number
of Common Shares 4,298,351 4,225,851
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
SUTRON CORPORTION
STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1999 1998
___________ __________
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $453,774 $ 419,698
Depreciation and amortization 53,988 50,089
Gain on increase of land investment - (206,106)
(Increase) Decrease in:
Accounts receivables 37,894 595,763
Costs and estimated earnings in
excess of contract billings 584,816 266,413
Inventory (671,495) (257,567)
Other assets 131,781 (65,313)
Increase (Decrease) in:
Accounts payable (46,420) (77,397)
Accrued expenses (399,200) (32,678) Accrued income taxes 123,525 -
Estimated losses on uncompleted
contracts 0 (19,282)
__________ _______
Net Cash Provided by Operating Activities 268,663 355,884
Cash Flows from Investing Activities:
Capital expenditures (125,347) (336,526)
Net Cash Used in Investing Activities (125,347) (336,526)
Cash Flows from Financing Activities:
Payments on line of credit (63,357) (573,171)
Payments on Term notes payable (12,500) (42,876)
Payments on Installment notes payable (3,410) (633)
Payments on shareholder notes (55,000) (25,000) ___________ __________
Net Cash (Used) by Financing Activities (134,267) (641,680)
Net Increase (Decrease) in Cash 9,049 163,461
Cash and Cash Equivalents, January 1 76,205 168,549
___________ __________
Cash and Cash Equivalents, June 30 $ 85,254 $ 5,088
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
SUTRON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
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 1998 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
Results of Operations
Second Quarter 1999 Compared to 1998
Net Revenues. Sutron Corporation revenues for the
fiscal quarters ended June 30, 1999 and June 30, 1998 were
$3,058,634 and $2,084,978, respectively (an increase of 47%).
The Company had strong bookings for the 8210 Data
Recorder with a GOES Satellite Transmitter.
Gross Profit. The Company's gross profit for the quarter
ended June 30, 1999 increased 87% to $1,391,374 from $746,007
for June 30, 1998. Gross profit as a percentage of sales increased
to 45.5% from 35.8%. Gross profits increased in 1999 due to strong
sales of the 8210 Data Recorder with a GOES Satellite Transmitter
and to reduced manufacturing costs of the 8210's. The prior year's
margins were hurt by increased indirect labor and expenses relating
to the opening of a new customer support facility in Boise, Idaho
and lower sales volume.
Selling, General And Administrative. Selling, general and
administrative costs increased $100,942 to $609,568 for the quarter
ended June 30, 1999 from $508,626 for 1998. The increase is due
to increased sales and marketing expenses by the Integrated Services
Division, the addition of a network supervisor and increased
General and administrative expenses.
Research And Development. Research and development
expenses decreased 3% to $241,991 in the quarter ended June 30,
1999 from $250,136 in the quarter ended June 30, 1998. The
Company reduced its use of subcontractors in 1999 as compared
to the prior year and added three new engineers who were
not on staff during the first half of 1998.
In 1998, the Company sold its 4.2 acre lot in the Loudoun
Tech Center for $700,000. The land was originally purchased
for $1,219,792 in October 1986. An additional $80,518
was spent on architectural drawings. The
loss of approximately $600,000 on the sale resulted in a
deferred tax benefit of $230,000 as of June 30, 1998 which
tax benefit reduced income tax expenses. At June 30, 1998
the Company wrote the land up from its book value of $493,000
resulting in a gain of $206,106.
Six months ended June 30, 1999 Compared to 1998
Revenues. The Company's revenues for the six months ended
June 30, 1999 increased 44% to $5,593,824 from revenues
of $3,894,727 in 1998 due to increased sales of the
8210 Data Recorder/Transmitter product line. The US
Geological Survey placed two orders totaling $1,912,000
for the 8210 Data Recorder with a GOES transmitter during
the first six months. The 8210's are to replace older
units which are being retired by the US Geological
Survey.
Gross Profit. Gross profit for 1999 increased to $2,397,492
from $1,447,268 in 1998. Gross margin as a percentage of
revenues for 1999 increased to 42.9% as compared to 37.2%
in 1998. The increase in the Company's gross margin as a
percentage of sales is attributed to the increased sales volume
of $1,699,097 and to reduced manufacturing costs of the 8210's.
Selling, General and Administrative. Selling, general and
administrative expenses increased to $1,215,960 in 1999 from
$989,577 in 1998, an increase of $226,383 due to increased
sales and marketing activities by the Integrated Services
Division, the addition of a network supervisor and increased
general and administrative expenses.
Research and Development. Research and development
expenses increased 4% to $470,413 in 1999 from $452,376
in 1998, an increase of $18,037. The Company reduced its
use of subcontractors in 1999 as compared to the prior
year and added three new engineers who were not on staff
during the first half of 1998.
Other Income. A joint venture between Sutron and Virginia
Energy Services was started on February 27, 1998 to
sell remote monitoring systems of backup power generators.
Due to slow sales, Sutron bought out Virginia Energy Services as
of December 31, 1998 for approximately $4,500. Expenses relating
to the joint venture were $7,682 in 1999 and $19,379 in 1998.
In 1998, The Company sold its 4.2 acre lot in the Loudoun Tech
Center for $700,000. The land was originally
purchased for $1,219,792 in October 1986. An additional
$80,518 was spent on architectural drawings. The loss of
approximately $600,000 on the sale resulted in a deferred tax
benefit of $230,000 as of June 30, 1998 which tax benefit reduced
income tax expenses. At June 30, 1998 the Company wrote
the land up from its book value of $493,000 resulting in a
gain of $206,106.
Backlog. The Company's backlog of orders at June 30, 1999 was
approximately $3,448,000. The Company anticipates that 90%
of its June backlog will be shipped in 1999.
Liquidity and Capital Resources
Cash and cash equivalents increased to $85,254 at June 30, 1999,
compared to $76,204 at December 31, 1998.
The ratio of current assets to current liabilities was 2.5 as of
June 30, 1999, compared to 2.1 as of December 31, 1998. Working
capital increased $380,316 to $3,097,170 at the end of the second
quarter of fiscal 1999 compared to $2,716,854 at the end of fiscal 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 1999.
Impact of the Year 2000 Issue
The Company's current line of products is year 2000 ready. In addition,
The Company has made available to its customers year 2000 information
Concerning its products, services and support. The Company's suppliers
Have been contacted and have informed us that they are compliant. The
Company's Information Systems group has reviewed the critical
Applications and has identified no significant problems.
The Company has determined its worst case scenario as being the
Development of service or product supply difficulties by
business and critical suppliers. There can be no assurance that the
Systems or products of other companies on which the Company's
Systems rely will be timely converted or that any such failure to
Convert by a vendor, customer or another company would not have
An adverse effect.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 7, 1999, an Annual Meeting of Shareholders
of Sutron Corporation was held. Directors elected at the
meeting were Raul S. McQuivey, Thomas N. Keefer,
Daniel W. Farrell, Glenn A. Conover and Ronald C. Dodson.
Thompson, Greenspon & Co., P.C. were appointed as
independent accountants for 1999. The election of directors
and the appointment of the independent accountants were
the only matters voted upon at the meeting. The number of
shares eligible to vote at the meeting were 4,298,351. The
results of the voting on these three matters are shown below.
<TABLE>
<CAPTION>
1. Election of Directors
Name Votes For Votes Against Votes Withheld
<S> <C> <C> <C>
Raul S. McQuivey 3,882,053 -- 8,130
Thomas N. Keefer 3,882,053 -- 8,130
Daniel W. Farrell 3,882,053 -- 8,130
Glenn A. Conover 3,882,053 -- 8,130
Ronald C. Dodson 3,882,053 -- 8,130
</TABLE>
2. Appointment of Thompson, Greenspon & Co., P.C.
as Independent Accountants.
For Against Abstain
3,880,734 9,049 400
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)
August 16, 1999 Raul S. McQuivey
Date Raul S. McQuviey
Principal Executive Officer
August 16, 1999 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 Six Months Ended
June 30, June 30,
1999 1998 1999 1998
___________ _________ ________ ________
<S> <C> <C> <C> <C>
Basic EPS
Average shares outstanding 4,298,351 4,225,851 4,225,851 4,225,851
Net Income $346,787 $411,899 $453,774 $419,698
Net Income per common share $.08 $.10 $.11 $.10
Dilutive EPS
Average shares outstanding 4,298,351 4,225,851 4,298,351 4,225,851
Effect of dilutive securities 58,052 210,991 64,750 188,650
Total average shares outstanding4,356,403 4,436,842 4,363,101 4,414,501
Net earnings $346,787 $411,899 $453,774 $419,698
Net income per diluted share $.08 $.09 $ .10 $ .10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Article 5 Fin. Data Schedule for 2nd Qtr 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 85254
<SECURITIES> 0
<RECEIVABLES> 1662678
<ALLOWANCES> 0
<INVENTORY> 2499736
<CURRENT-ASSETS> 5107942
<PP&E> 1902510
<DEPRECIATION> 1288947
<TOTAL-ASSETS> 5741743
<CURRENT-LIABILITIES> 2010772
<BONDS> 0
<COMMON> 42984
0
0
<OTHER-SE> 3625486
<TOTAL-LIABILITY-AND-EQUITY> 5741743
<SALES> 5593824
<TOTAL-REVENUES> 5593824
<CGS> 3196332
<TOTAL-COSTS> 3196332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20163
<INCOME-PRETAX> 683274
<INCOME-TAX> 229500
<INCOME-CONTINUING> 453774
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 453774
<EPS-BASIC> .11
<EPS-DILUTED> .10
</TABLE>
