FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] AMENDMENT NO. 1 TO QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark one)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1998
-------------------------------
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-15967
EFI ELECTRONICS CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 75-2072203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1751 South 4800 West, Salt Lake City, Utah 84104 (Address of
principal executive offices)
Registrant's telephone number, including area code: (801) 977-9009
Check 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 past twelve 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 |_|_
Number of shares of the registrant's $0.0001 par value common stock
outstanding at July 31,1998: 5,574,479
Part I, Item 1 of the Company's Quarterly Report are hereby amended to revise
financial statements and disclosures related to the valuation of the Company's
acquisition of EFI Electronics Europe, SL and the correction of an error in
valuing inventory for periods prior to fiscal 1999.
<PAGE>
Table of Contents
PART I FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements
Balance Sheets as of June 30, 1998 (Unaudited) and
March 31, 1998 ......................................................3
Statements of Earnings for the three months
ended June 30, 1998 and 1997 (Unaudited).............................4
Statements of Cash Flows for the three months
ended June 30, 1998 and 1997 (Unaudited).............................5
Notes to Financial Statements (Unaudited)....................6 - 7
Signatures...............................................................8
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATE BALANCE SHEETS
JUNE 30, 1998 MARCH 31, 1998
- --------------------------------------------------------------------------------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,283 $ 9,566
Receivables, net 3,382,438 3,981,682
Inventories, net 3,546,895 2,726,606
Prepaid expenses 120,939 90,817
- ----------------------------------------------------------------------------
Total current assets 7,051,555 6,808,671
- ----------------------------------------------------------------------------
Property - net 2,490,439 2,539,290
Other assets:
Goodwill 835,653 866,603
Other assets 64,477 62,130
- ----------------------------------------------------------------------------
Total other assets 900,130 928,733
- ----------------------------------------------------------------------------
Total assets $ 10,442,124 $ 10,276,694
============================================================================
LIABILITIES
Current liabilities:
Revolving line of credit $ 3,207,335 $ 3,472,935
Current maturities of
capital lease obligations 164,609 159,242
Current maturities of
notes payable 691,326 681,690
Accounts payable 1,458,353 1,595,440
Reserve for customer warranty 289,742 258,405
Accrued liabilities 264,728 294,297
- ----------------------------------------------------------------------------
Total current liabilities 6,076,093 6,462,009
- ----------------------------------------------------------------------------
Long-term liabilities:
Capital lease obligations,
less current maturities 306,890 353,498
Notes payable, less current
maturities 803,908 895,082
- ----------------------------------------------------------------------------
Total long-term liabilities 1,110,798 1,248,580
- ----------------------------------------------------------------------------
Total Liabilities 7,186,891 7,710,589
- ----------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock 553 551
Additional paid-in capital 3,067,195 3,045,139
Cumulative foreign currency
translation adjustment 1,518 (5,870)
Retained earnings 395,967 (263,714)
- ----------------------------------------------------------------------------
3,465,233 2,776,105
Less:
Stock subscriptions and notes receivable
from management (210,000) (210,000)
- ----------------------------------------------------------------------------
Total stockholders' equity 3,255,233 2,566,105
- ----------------------------------------------------------------------------
Total liabilities and
===================================
stockholders' equity $ 10,442,124 $ 10,276,694
============================================================================
See notes to financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
For the three months ended June 30, 1998 1997
- ------------------------------------------------------------------------------
Net sales $ 3,582,053 $ 3,639,459
Cost of sales 2,306,313 2,284,857
- ------------------------------------------------------------------------------
Gross profit 1,275,740 1,354,602
- ------------------------------------------------------------------------------
Operating expenses:
Selling, general and
administrative expenses 876,597 1,037,601
Research and development 206,132 173,685
- ------------------------------------------------------------------------------
Total operating expenses 1,082,729 1,211,286
- ------------------------------------------------------------------------------
Earnings from operations 193,011 143,316
- ------------------------------------------------------------------------------
Other income/(expense):
Equity in earnings of
EFI Electronics Europe -0- 52,875
Interest expense (137,053) (130,139)
Other, net (28,848) (23,050)
- -------------------------------------------------------------------------------
Total other expense, net (165,901) (100,314)
- -------------------------------------------------------------------------------
Earnings before income taxes 27,110 43,002
Income taxes -0- -0-
- ------------------------------------------------------------------------------
Net earnings $ 27,110 $ 43,002
==============================================================================
Earnings per share:
Basic $ 0.00 $ 0.01
Diluted $ 0.00 $ 0.01
==============================================================================
Weighted average shares outstanding
Basic 5,537,297 4,216,174
Diluted 5,675,022 4,359,914
==============================================================================
See notes to financial statements.
2
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
For the three months ended June 30, 1998 1997
- ---------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net earnings $ 27,110 $ 43,002
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 182,469 137,686
Amortization 35,882 9,878
Equity in earnings of joint venture -0- (52,875)
Increase/(decrease) in cash due to change in:
Receivables 599,244 193,001
Inventories (187,717) (242,133)
Prepaid expenses (30,122) (26,460)
Other assets (7,279) (3,001)
Accounts payable (137,087) (48,869)
Warranty reserve 31,337 12,551
Accrued income taxes payable -0- (43,500)
Accrued liabilities (29,569) 165,044
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities 484,268 144,324
- ---------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (133,618) (302,934)
- ----------------------------------------------------------------------------------------------
Net cash used in investing activities (133,618) (302,934)
- ----------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change under revolving line of credit (265,600) 1,487
Principal payments on notes payable (81,538) (56,820)
Principal payments under capital lease obligations (41,241) -0-
Proceeds from borrowings under notes payable -0- 205,000
Proceeds from exercise of stock options 22,058 -0-
- ---------------------------------------------------------------------------------------------
Net cash (used in)/provided by financing activities (366,321) 149,667
- ---------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 7,388 -0-
- ---------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (8,283) (8,943)
Cash and cash equivalents at beginning of period 9,566 10,123
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 1,283 $ 1,180
=============================================================================================
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Income taxes $ -0- $ -0-
Interest $ 153,000 $ 95,000
=============================================================================================
</TABLE>
See notes to financial statements.
3
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
In the opinion of Management, the accompanying consolidated financial statements
contain adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the financial position of EFI Electronics Corporation (the
"Company") and subsidiary at June 30, 1998 and March 31, 1998, and the results
of their operations and their cash flows for the three months ended June 30,
1998 and 1997. The results of operations for the three months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
year ending March 31, 1999.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted as specified by the instructions to Form 10-QSB
and Item 310 of Regulation S-B. It is suggested that these financial statements
and related notes be read in conjunction with the Company's 1998 Form 10-KSB
included in the Annual Report to Shareholders.
1. RECEIVABLES
Receivables consisted of the following:
June 30,1998 March 31, 1998
(Unaudited)
Trade and other receivables $ 3,436,211 $ 4,026,047
Allowance for doubtful accounts (53,773) (44,365)
- -------------------------------------------------------------------------------
Total Receivables $ 3,382,438 $ 3,981,682
===============================================================================
2. INVENTORIES
Inventories consisted of the following:
June 30, 1998 March 31, 1998
- -------------------------------------------------------------------------------
(Unaudited)
Raw materials $ 1,783,796 $ 1,842,504
Work-in-process 805,088 552,250
Finished goods 1,090,986 1,039,424
- -------------------------------------------------------------------------------
3,679,870 3,434,178
Less allowance for obsolete inventory (132,975) (75,000)
- --------------------------------------------------------------------------------
Total $ 3,546,895 $ 3,359,178
===============================================================================
3. NET EARNINGS PER COMMON SHARE
Net earnings per common and common equivalent share is computed based on the
number of common and dilutive common stock equivalent shares outstanding and is
adjusted for the assumed conversion of shares issuable upon exercise of options
or warrants, after the assumed repurchase of common shares with the related
proceeds. Stock subscriptions receivable are treated as outstanding shares for
purposes of this computation.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) 128, "Earnings per Share." SFAS 128 is
effective for financial statements for periods ending after December 15, 1997,
and requires companies to report both basic and diluted earnings per share.
Basic earnings per share does not include the addition of common stock
equivalents to the shares outstanding. Diluted earnings per share requires the
addition of common stock equivalents to the shares outstanding. Average shares
outstanding is the denominator used in basic earnings per share calculations.
Accordingly, basic earnings per share will be higher than diluted earnings per
share.This statement replaces Accounting Principles Board (APB) 15. The effect
of adopting SFAS 128 did not materially effect the Company's earnings per share.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued (Unaudited)
NET EARNINGS PER COMMON SHARE, continued
The following data show the amounts used in computing earnings/(loss) per common
share, including the weighted average number of shares and dilutive potential
common stock.
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended June 30,
1998 1997
Shares outstanding during the entire period 5,504,644 4,216,174
Weighted average shares issued during the period 32,653 -0-
Weighted average number of shares used in basic EPS 5,537,297 4,216,174
Dilutive effect of stock options and warrants 137,725 143,740
------------- ----------
Weighted average number of shares and dilutive
potential stock used in dilutive EPS 5,675,022 4,359,914
============ ===========
</TABLE>
4. REVOLVING LINE OF CREDIT, CAPITAL LEASE OBLIGATIONS AND NOTES PAYABLE
At June 30 and March 31, 1998, revolving line of credit, capital lease
obligations and notes payable, the carrying value of which approximates fair
value, consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, 1998 March 31, 1998
(Unaudited)
Revolving line of credit $ 3,207,335 $ 3,472,935
=================================================================================================
Capitalized lease obligations 471,499 512,740
Less current maturities (164,609) (159,242)
- --------------------------------------------------------------------------------------------------
Capitalized lease obligations (less current maturities) $ 306,890 $ 353,498
=================================================================================================
Notes payable:
Collateralized promissory note $ 798,676 $ 848,695
Uncollateralized subordinated note - director 300,000 300,000
Collateralized promissory note - machinery 163,996 174,247
Uncollateralized note - acquisition 232,562 253,830
- -------------------------------------------------------------------------------------------------
1,495,234 1,576,772
Less current maturities (691,326) (681,690)
- -------------------------------------------------------------------------------------------------
Total notes payable, less current installments $ 803,908 $ 895,082
=================================================================================================
</TABLE>
The revolving line of credit in place at June 30, 1998, provides for borrowings
up to $3,700,000 collateralized by accounts receivable and inventories. Interest
is payable monthly at a rate of prime (8.50% as of June 30, 1998) plus 2.5%.
Principal payments are made as cash is received from customers for accounts
receivable. Borrowings are based on formulas involving balances of eligible
accounts receivable and inventories. The line of credit agreement expires in
March 2000.
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.
EFI ELECTRONICS CORPORATION
(Registrant)
May 26, 1999
Richard D. Clasen
Chief Executive Officer, President and
Director (Principal Executive Officer)
May 26, 1999
David G. Bevan
Chief Financial Officer, Executive Vice
President & Secretary (Principal
Financial Officer)
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
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<MULTIPLIER> 1
<CURRENCY> US $
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> mar-31-1998
<PERIOD-START> apr-01-1998
<PERIOD-END> jun-30-1998
<EXCHANGE-RATE> 1
<CASH> 1,283
<SECURITIES> 0
<RECEIVABLES> 3,436,211
<ALLOWANCES> 53,773
<INVENTORY> 3,546,895
<CURRENT-ASSETS> 7,051,555
<PP&E> 2,490,439
<DEPRECIATION> 182,469
<TOTAL-ASSETS> 10,442,124
<CURRENT-LIABILITIES> 6,076,093
<BONDS> 1,110,798
0
0
<COMMON> 553
<OTHER-SE> 3,067,195
<TOTAL-LIABILITY-AND-EQUITY> 10,442,124
<SALES> 3,582,053
<TOTAL-REVENUES> 3,582,053
<CGS> 2,306,313
<TOTAL-COSTS> 1,082,729
<OTHER-EXPENSES> 28,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137,053
<INCOME-PRETAX> 27,110
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,110
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,110
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
