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 January 31, 2000
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)
(858) 549-6340 FAX (858) 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 January 31, 2000, the registrant had 3,148,648 shares of Common Stock,
$.01 par value, issued and outstanding.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1: Financial Statements
BALANCE SHEET
January 31 October 31
2000 1999
------------ ------------
(Unaudited) (Audited)
ASSETS
- --------------
CURRENT ASSETS
Cash ................................................ $1,327,454 $1,100,816
Investments in available-for-sale securities ........ 2,058,551 2,043,959
Trade accounts receivable less allowance
for doubtful accounts of $27,210 .................... 694,770 757,665
Notes receivable .................................... 12,000 12,000
Inventories - Note 3 ................................ 2,629,184 2,413,123
Prepaid expenses and deposits ....................... 244,781 247,391
Deferred tax assets ................................. 74,000 74,000
----------- -----------
TOTAL CURRENT ASSETS ........................... 7,040,740 6,648,954
FIXED ASSETS
Furniture and office equipment ...................... 201,314 184,002
Equipment and tooling ............................... 512,887 481,768
---------- ----------
Fixed assets, at cost .......................... 714,201 665,770
Less accumulated depreciation and amortization ...... 545,085 530,935
----------- ----------
NET FIXED ASSETS ............................... 169,116 134,835
Note receivable from stockholder .................... 70,000 70,000
Deferred tax assets ................................. 78,000 78,000
Other assets ........................................ 4,900 4,900
----------- ----------
TOTAL ASSETS ................................... $ 7,362,756 $6,936,689
=========== ===========
See Notes to Financial Statements
2
<PAGE>
BALANCE SHEET
January 31 October 31
2000 1999
------------ ------------
(Unaudited) (Audited)
LIABILITIES AND
STOCKHOLDERS' EQUITY
- --------------------------------------
Accounts payable ................................. $ 182,149 $ 88,496
Accrued expenses ................................. 445,121 357,843
----------- -----------
TOTAL CURRENT LIABILITIES ................... 627,270 446,339
STOCKHOLDERS' EQUITY
Common Stock - $.01 par value
Authorized - 10,000,000 shares
Issued & outstanding 3,148,648 shares .......... 31,486 31,486
Additional paid-in capital ....................... 4,400,868 4,400,868
Retained earnings ................................ 2,569,974 2,348,351
Unearned compensation ............................ (188,088) (211,602)
Receivables from sale of stock ................... (25,900) (25,900)
Treasury stock, at cost - 29,400 shares .......... (52,854) (52,853)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY .................. 6,735,486 6,490,350
----------- -----------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY ..................... $ 7,362,756 $ 6,936,689
=========== ===========
See Notes to Financial Statements
3
<PAGE>
Item 1: Financial Statements (continued)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
January 31
-------------------------
2000 1999
---------- ----------
Net sales ........................................ $ 1,760,526 $ 1,330,798
Cost of Sales .................................... 845,255 661,605
----------- -----------
Gross profit .................................. 915,271 669,193
Operating expenses:
Engineering ................................... 65,481 65,593
Selling and general ........................... 508,726 411,820
----------- -----------
Total ..................................... 574,207 477,413
----------- -----------
Income from operations ........................ 341,064 191,780
Interest income, net ............................. 30,559 31,448
----------- -----------
Income before provision for income tax ....... 371,623 223,228
Provision for income tax ..................... (150,000) (89,000)
----------- -----------
Net income ............................... $ 221,623 $ 134,228
=========== ===========
Per share data:
Basic earnings per share ................. $ 0.07 $ 0.04
=========== ===========
Diluted earnings per share ............... $ 0.06 $ 0.04
=========== ===========
Diluted shares outstanding ....................... 3,707,526 3,603,081
=========== ===========
See Notes to Financial Statements
4
<PAGE>
Item 1: Financial Statements (continued)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended
January 31
------------------------------
2000 1999
------------------------------
OPERATING ACTIVITIES
Net income.......................................... $ 371,622 $ 134,228
Adjustments to reconcile net income
to net cash provided by operations
Depreciation and amortization ................... 14,150 12,903
Amortization of unearned compensation............ 23,514 33,378
Change in assets - (incr) decr:
Accounts receivable - trade ...................... 62,895 23,519
Inventories....................................... (216,061) 82,135
Other assets...................................... 2,610 40,504
Change in liabilities - incr (decr):
Accounts payable.................................. 99,379 (64,881)
Accrued expenses.................................. (68,448) (157,834)
---------- ----------
Net cash provided by operating activities........... 289,661 103,952
---------- ----------
INVESTING ACTIVITIES
Purchase of available-for-sale securities......... 0 (16,847)
Capital expenditures.............................. (48,431) (5,125
---------- ----------
Net cash used in investing activities............... (48,431) (21,972)
---------- ----------
Net increase in cash
and cash equivalents............................. 241,230 81,980
Cash and cash equivalents at the
beginning of the period......................... 3,144,775 1,209,143
---------- -----------
Cash and cash equivalents at
the end of period.............................. $ 3,386,005 $ 1,291,123
========== ============
See Notes to Financial Statements
5
<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 January 31, 2000 and the results of
operations for the three month period ended January 31, 2000 and 1999.
Note 2 - Interim reporting
The results of operation for the three month period ended January 31,
2000 and 1999 are not necessarily indicative of the results to be
expected for the remainder of the year.
Note 3 - Components of inventory
January 31, 2000
------------------
(Unaudited)
Raw material and supplies................ $ 394,078
Finished goods........................... 2,235,106
------------
TOTAL........................... $ 2,629,184
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THREE MONTHS 2000 VS. THREE MONTHS 1999
Net sales increased 32.2%, or $429,728, to $1,760,526 from $1,330,798 in the
first three months of fiscal 2000. RF Connectors sales increased 53.7% to
$1,614,266, from the same period last year, due to cable assembly sales, new
products and new distributors. RF Neulink sales were $146,260, down 48.9% from
the same period last year. This decrease can be attributed to some customers
delaying their delivery dates.
Cost of sales increased 27.7%, or $183,651, to $845,256 from $661,606 last year
and as a percentage of sales decreased to 48% from 49.7% last year. The
improvement in gross margin is attributable to the sales increase.
Engineering expenses decreased $112, to $65,481 from $65,593 last year.
Selling and general expenses increased 23.5% or $96,906, to $508,726 from
$411,820 last year. The increase is due to increased travel, co-op advertising
and insurance expenses. As a percent of sales, selling and administrative
expenses declined to 28.9% from 30.9% due to the increase in sales.
Net interest income decreased $889 to $30,559 from $31,448 .
The provision for income taxes increased $61,000 due to the Company's increased
profitability.
6
<PAGE>
MATERIAL CHANGES IN FINANCIAL CONDITION:
Cash increased $226,638 to $1,327,454 compared to the October 31, 1999 fiscal
year balance of $1,100,816. Cash and investments are $3,386,005 at January 31,
2000.
Trade accounts receivable decreased $62,985, or 8.3% to $694,770 compared to the
October 31, 1999 balance of $757,665, and decreased to 39.4% of sales for the
quarter. This decrease is due to increased collection efforts.
Inventories increased $216,061 compared to the October 31, 1999 inventory level.
This increase is in balance with the current demand.
Prepaid expenses and deposits decreased $2,610 from October 31, 1999 due to
fewer deposits on inventory.
YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs using only two digits to
identify a year within date fields. Date-sensitive software may recognize a date
using "00" as year 1900 rather than the year 2000. Such an error could result in
a system failure causing disruptions of operations. The Company is assessing the
readiness of its significant suppliers and large customers to determine the
extent to which the Company is vulnerable to those third parties' failure to
remediate their own Year 2000 issues. The Company has updated equipment and does
not expect any problems resulting from the Year 2000 issue. However, there can
be no guarantee that the systems of other companies will be timely converted, or
that a failure to convert by another company would not have a material effect on
the Company. The Company has determined that it has no exposure to contingencies
related to the Year 2000 issue for the products it has sold.
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 January 31, 2000.
7
<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: March 15, 2000 By: /s/ Howard F. Hill
-------------------------------------
Howard F. Hill, President
Chief Executive Officer
Dated: March 15, 2000 By: /s/ Terrie A. Gross
-------------------------------------
Terrie A. Gross
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-31-2000
<CASH> 1,327,454
<SECURITIES> 2,058,551
<RECEIVABLES> 721,980
<ALLOWANCES> 27,210
<INVENTORY> 2,629,184
<CURRENT-ASSETS> 7,040,740
<PP&E> 714,201
<DEPRECIATION> 512,887
<TOTAL-ASSETS> 7,362,756
<CURRENT-LIABILITIES> 627,270
<BONDS> 0
0
0
<COMMON> 31,486
<OTHER-SE> 6,704,000
<TOTAL-LIABILITY-AND-EQUITY> 7,362,756
<SALES> 1,760,526
<TOTAL-REVENUES> 1,760,526
<CGS> 845,255
<TOTAL-COSTS> 1,419,462
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (30,559)
<INCOME-PRETAX> 371,623
<INCOME-TAX> 150,000
<INCOME-CONTINUING> 221,623
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 221,623
<EPS-BASIC> .07
<EPS-DILUTED> .06
</TABLE>
