SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FOR 10-QSB
Quarterly Report Under Section 13 or 15 (d) of
Securities Exchange Act of 1934
for Quarter ended April 30, 1997
Commission File Number 0-13301
RF INDUSTRIES, LTD.
(Exact name of registrant as specified in its charter)
Nevada 88-0168936
(State of Incorporation) (I.R.S. Employer Identification No.)
7610 Miramar Road., Bldg. 6000, San Diego, California 92126-4202
(Address of principal executive offices) (Zip Code)
(619) 549-6340 FAX (619) 549-6345
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
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 at the latest practicable date.
As of April 30, 1997, the registrant had 3,048,763 shares of Common Stock, $.01
par value, issued and outstanding.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEET
April 30 October 31
1997 1996
----------- -----------
(Unaudited) (Audited)
ASSETS
- -----------------
CURRENT ASSETS
Cash ................................................ $ 835,095 $ 403,547
Investments in available-for-sale securities ........ 623,047 604,186
Trade accounts receivable less allowance
for doubtful accounts of $12,412 .................... 760,721 703,097
Inventories - Note 3 ................................ 1,959,218 1,861,856
Prepaid expenses and deposits ....................... 512,727 276,109
Deferred tax assets ................................. 60,000 60,000
---------- ----------
TOTAL CURRENT ASSETS ........................... 4,750,808 3,908,795
FIXED ASSETS
Furniture and office equipment ...................... 107,633 107,633
Equipment and tooling ............................... 405,850 381,891
---------- ----------
Fixed assets, at cost .......................... 513,483 489,524
Less accumulated depreciation and amortization ...... 396,857 377,715
---------- ----------
NET FIXED ASSETS ............................... 116,626 111,809
Deferred tax assets ................................. 38,000 38,000
Other assets ........................................ 4,901 4,900
---------- ----------
TOTAL ASSETS................................... $ 4,910,335 $ 4,063,504
========== ==========
See Notes to Financial Statements
<PAGE>
Item 1: Financial Statements (continued)
BALANCE SHEET
April 30 October 31
1997 1996
---------- ----------
LIABILITIES AND
STOCKHOLERS' EQUITY
- -----------------------
CURRENT LIABILITIES
Accounts payable ................................. $ 364,973 $ 186,250
Accrued expenses ................................. 163,452 268,015
----------- -----------
TOTAL CURRENT LIABILITIES ................... 528,425 454,265
STOCKHOLDERS' EQUITY
Common Stock - $.01 par value
Authorized - 10,000,000 shares
Issued & outstanding 3,048,763 shares............ 30,488 27,782
Capital paid in excess of par value .............. 4,801,941 3,868,642
Retained earnings ................................ 510,970 166,547
Unearned compensation ............................ (960,709) (453,732)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY .................. 4,381,910 3,609,239
----------- -----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY ..................... $ 4,910,335 $ 4,063,504
=========== ===========
See Notes to Financial Statements
<PAGE>
Item 1: Financial Statements (continued)
STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
April 30 April 30
-------------------- ---------------------
1997 1996 1997 1996
------ ------ ------ ------
Net Sales ................... $1,750,831 $1,269,624 $3,678,928 $2,179,589
Cost of Sales ............... 1,050,880 510,839 2,121,312 961,804
---------- ---------- ---------- ----------
Gross Profit ........... 699,951 758,785 1,557,616 1,217,785
---------- ---------- ---------- ----------
Operating expenses:
Engineering ............ 109,767 130,582 221,595 235,239
Selling and general .... 458,039 362,025 795,081 642,333
---------- ---------- ---------- ----------
Total ................ 567,806 492,607 1,016,676 877,572
---------- ---------- ---------- ----------
Operating income ....... 132,145 266,178 540,940 340,213
Interest income ............. 16,026 10,898 30,700 24,909
---------- ---------- ---------- ----------
Income before provision
for income tax .............. 148,171 277,076 571,640 365,122
Provision for state & federal
income tax .................. 45,000 100,000 228,000 120,000
---------- ---------- ---------- ----------
Net income ............. $ 103,171 $ 177,076 $ 343,640 $ 245,122
========== ========== ========== ==========
Per share data:
Net income ............. $ 0.03 $ 0.06 $ 0.11 $ 0.08
========== ========== ========== ==========
Weighted average common
and common equivalent shares
outstanding ................. 3,163,291 2,988,235 3,125,872 2,921,202
========== ========== ========== ==========
See Notes to Financial Statements
<PAGE>
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
April 30
---------------------
1997 1996
------ ------
Net income...............................................$ 343,640 $ 245,122
Adjustments to reconcile net income
to net cash (used in) provided by operations
Depreciation and amortization ....................... 19,142 22,223
Amortization of unearned compensation ............... 109,677 19,165
Change in assets - (incr) decr:
Accounts receivable - trade ..................... (57,624) (163,480)
Inventories ..................................... (97,362) (146,788)
Other assets .................................... 236,618) 5,525
Change in liabilities - incr (decr):
Accounts payable ................................ 178,723 (64,116)
Accrued expenses ................................ 125,440 238,684
--------- ---------
Net cash (used in) provided by
operating activities ........................ 385,018 156,335
--------- ---------
INVESTING ACTIVITIES
Purchase of available-for-sale securities ....... (18,861) (12,983)
Capital expenditures ............................ (23,959) (21,347)
--------- ---------
Net cash provided by (used in)
operating activities .......................... (42,820) (34,330)
--------- ---------
FINANCING ACTIVITIES
Proceeds from sale of common stock .............. 20,000 20,000
Proceeds from exercise of common stock options .. 69,350 0
--------- ---------
Net cash provided by financing activities ....... 89,350 20,000
--------- ---------
Net (decrease) increase in cash
and cash equivalents ............................. 431,548 142,005
Cash and cash equivalents at the
beginning of the period .......................... 403,547 211,290
--------- ---------
Cash and cash equivalents at the end of period .....$ 835,095 $ 353,295
========== ==========
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1 - Management's opinion
In the opinion of management, the accompanying financial statements
contain all adjustments necessary to present the financial position of
RF Industries, Ltd. as of April 30, 1996 and the results of operations
for the three month and six month periods ended April 30, 1996 and
1995.
Note 2 - Interim reporting
The results of operation for the three month and six month periods
ended April 30, 1996 and 1995 are not necessarily indicative of the
results to be expected for the remainder of the year.
Note 3 - Components of Inventory
April 30, 1997
-----------------
(Unaudited)
Raw material and supplies........... $ 234,795
Finished goods...................... 1,724,423
------------
TOTAL........................... $ 1,959,218
============
<PAGE>
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SIX MONTHS 1997 VS. SIX MONTHS 1996
Net sales increased 69%, or $1,499,339, to $3,678,928 from $2,179,589 in the
first six months of fiscal 1996. RF Connectors sales increased 48% to
$2,519,314, from the same period last year. The increase is attributable to
expanded distribution and the introduction of the corrugated cable and din
connector products. RF Neulink sales were $1,159,614, up 146% from the same
period last year.
Cost of sales increased 121%, or $1,159,508, to $2,121,312 from $961,804 last
year and as a percentage of sales increased to 58% from 43% last year. The
increase in cost of sales is due to a changed product mix and shipment of lower
margin Neulink products in the first half of fiscal 1997.
Engineering expenses decreased 6.1%, or $13,644, to $221,595 from $235,239 last
year and declined, as a percent of sales, to 6% from 11% of sales last year due
to the increase in net sales.
Selling and general expenses increased 24%, or $152,748, to $795,081 from
$642,333, and declined, as a percent of sales, to 22% from 29% last year. Higher
selling and administrative expenses to support training of personnel at the
company's large new distributors was offset by the increase in net sales.
Interest income increased $5,791 to $30,700 from $24,909 due to the company's
higher average cash balances and an increase in the rate of interest received.
The provision for income taxes increased $108,000. Last year, the company was
able to utilize tax loss carryforwards to reduce its effective tax rate.
THREE MONTHS 1997 VS. THREE MONTHS 1996
Sales increased 38%, or $481,207, to $1,750,831 from $1,269,624 in the second
quarter of fiscal 1996. The sales increase was due to a 33% increase in RF
Connectors sales to $1,317,384. The increase in Connectors sales is due to the
company's additional distributors. Neulink's sales were affected by delays as
reviewed in the six month results.
Cost of sales increased 106%, or $540,041, to $1,050,880 from $510,839 and as a
percentage of sales increased to 60% from 40% last year. The reasons for the
increase are discussed in the six month results.
Engineering expenses decreased 16%, or $20,815, to $109,767 from $130,582 last
year and declined, as a percent of sales, to 6% from 10% of sales last year due
to the increase in net sales.
Selling and general expenses increased 27%, or $96,014, to $458,039 from
$362,025, and declined, as a percent of sales, to 26% from 29% last year.
Increased selling and administrative expenses to support training of personnel
at the company's large new distributors was offset by higher net sales.
Interest income increased $5,128 to $16,026 due to the company's higher average
cash balances and an increase in the rate of interest received.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
MATERIAL CHANGES IN FINANCIAL CONDITION:
Cash increased $431,548 to $835,095 compared to the October 31, 1996 fiscal
year balance of $353,295. Cash and cash equivalents are $1,458,142 at April 30,
1997.
Trade accounts receivable increased $57,624, or 8% to $760,721 compared to the
October 31, 1996 balance of $703,097. This is due to the company's increased
sales .
Inventories increased $97,362 compared to the October 31, 1996 inventory level
as a result of purchases to meet higher customer demand.
Prepaid expenses and deposits increased $236,618 from October 31, 1996 due to
more deposits for inventory purchases.
PART II. OTHER INFORMATION
Items 1-4: Not applicable
Item 5: Information required in lieu of Form 8-K
None.
Item 6: Exhibits and Reports on 8-K
(a) None required
(b) Reports on Form 8-K
No reports on Form 8-K were filed during
fiscal quarter ended April 30, 1997.
<PAGE>
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.
RF INDUSTRIES, LTD.
Dated: June 5, 1997 By: /s/ Howard F. Hill
----------------------------------------
Howard F. Hill, President
Dated: June 5, 1997 By: /s/ Terrie A. Gross
----------------------------------------
Terrie A. Gross, Cheif Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1997
<PERIOD-END> APR-30-1997
<CASH> 835,095
<SECURITIES> 623,047
<RECEIVABLES> 773,133
<ALLOWANCES> 12,412
<INVENTORY> 1,959,218
<CURRENT-ASSETS> 4,750,808
<PP&E> 513,483
<DEPRECIATION> 396,857
<TOTAL-ASSETS> 4,910,335
<CURRENT-LIABILITIES> 528,425
<BONDS> 0
0
0
<COMMON> 30,488
<OTHER-SE> 4,351,422
<TOTAL-LIABILITY-AND-EQUITY> 4,910,335
<SALES> 3,678,928
<TOTAL-REVENUES> 3,678,928
<CGS> 2,121,312
<TOTAL-COSTS> 3,137,988
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (30,700)
<INCOME-PRETAX> 571,640
<INCOME-TAX> 228,000
<INCOME-CONTINUING> 343,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 343,640
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
