SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K SB
Annual Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended September 30, 1997
Commission File No. 0-3425
PLATRONICS, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1440857
(State or other jurisdiction of (I.R.S. Employer or
incorporation or organization) Identification No.)
301 Commerce Road, Linden, New Jersey 07036
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area
code: (908) 862-3600
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No X
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 and 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 No X
As of September 30, 1997, the aggregate market value of the
voting stock held by non-affiliates of the registrant was
approximately $1,297,616.20 as computed by reference to the average
bid and ask prices of the stock.
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the most recent practicable
date.
Date Number of Shares Outstanding
September 30, 1997 910,031 Common Shares
<PAGE>
PART I
Item 1. Business
General Development of Business
Platronics, Inc. (the "Company") is a New Jersey
corporation incorporated on September 28, 1946.
As of September 30, 1997, there was no material change in
the nature of the business done by the Company during the prior
year.
Bankruptcy
On November 24, 1993, the Company filed a voluntary
petition for reorganization pursuant to Chapter 11 of the United
States Bankruptcy Court for the District of New Jersey. A
bankruptcy plan of reorganization was approved by the Court on June
25, 1996.
Narrative Description of Business
Products and Services: The Company is primarily engaged
in the business of precision electroplating of electrical and
electronic components and semiconductor products used in computers,
data processing and communication equipment, and microwave
transmission equipment. In general, electroplating is the process
of plating with an adherent continuous coating by
electrodeposition, or by the creation of deposits through chemical
changes produced by passing an electric current through a non-
metallic electric conductor called an electrolyte. (The term
"electroplating" is hereinafter sometimes referred to as a
"plating"). The Company specializes in, among other things,
plating with precious metals. It employs unique plating and other
techniques designed and developed by the Company. Such techniques
are not, however, patented. The Company's customers impose various
requirements with respect to plating done by the Company, ranging
from requiring a coating of only a small portion of each micro-
miniature item to requiring a coating consisting of precious and
base metals to achieve properties which are not characteristic of
the base metal. The plating material includes previous metals such
as gold, silver, rhodium and palladium, and base metals such as
copper, nickel and tin.
Components plated by the Company include semiconductor
products such as diodes, transistors, and rectifiers; telephone and
telegraphic components; metal parts and electronic parts for
computers and data processing equipment, components for microwave
transmission and Defense Department related weaponry components.
The Company services its customers not only by its barrel
and rack plating operations, but also by continuous automatic reel
to reel plating procedures.
Sources and Availability of Raw Materials: The most
important raw materials used by the Company are gold and silver.
Although the Company presently purchases its particular
metal requirements from three principal suppliers, it need not rely
on any one supplier because there are many suppliers of such
materials available. The Company does not anticipate any problems
with respect to the availability of any raw materials required.
Seasonality: The Company customarily experiences a late
summer slowdown averaging 30%, primarily because many customers
have annual plant shutdowns at that time.
Working Capital Items: The Company sometimes must buy
the precious metals it uses for plating materials in significant
quantities in order to have them readily available and to receive
a discount on the related purchase prices. Such purchases require
substantial periodic outlays of working capital.
Also related to working capital is the general practice
in the electroplating industry with respect to completed job orders
that are rejected by the customers. In most cases, if the grounds
for rejection are reasonable (a) if the job has been billed, the
customer's account will be credited, (b) the job will be redone,
and (c) the customer will be rebilled. The Company's practices
with respect to such matters are consistent with the foregoing.
Another item affecting working capital is the Company's
practice of billing its customers for work performed on a "net 30
days" basis. The Company believes that such practice is consistent
with the practices employed in the industry.
Customers: The Company had one customer which accounted
for 10% or more of the Company's gross revenues during the fiscal
year ended September 30, 1997, which was Stewart Connection, which
accounted for 23.62% of the Company's gross revenues for said year.
Backlog Orders: There was no material backlog of
unshipped orders believed to be firm as of September 30, 1997 and
September 30, 1996, respectively.
Competitive Conditions: The Company competes with a
number of other independent electroplating shops for business with
customers located primarily in the eastern part of the United
States. Such customers may, from time to time, include large
industrial companies. Such companies may have in-house
electroplating shops, and the Company competes for overflow work
from such shops.
The Company believes that a significant competitive
condition affecting the domestic electroplating industry and thus
the Company relates to reduced levels of domestic electroplating
business. Such reduced levels are based in part on large U.S.
industrial companies, which previously utilized domestic
manufacturing facilities to produce items which then would be
electroplated domestically, switching to foreign production and
electroplating of such items, based in large part on the lower cost
of foreign labor. Such companies have either acquired foreign
facilities or have contracts with foreign firms. Reduced levels of
domestic business are also due to the failure of business
opportunities relating to plating jobs in connection with personal
computers to materialize at least on a domestic level. As a result
of the foregoing, independent electroplating shops are competing
more intensely for fewer customers and fewer job orders and are
also competing with new foreign electroplating competitors
commencing operations in Korea, Japan, Taiwan, Mexico and Europe,
in response to new telephone and electronic equipment manufacturing
operations in those countries.
As in prior years, price and service are the principal
areas of competition between the Company and its competitors. In
particular, heightened competition for customers has increased
competition in the area of prices. As a result, the Company has
experienced a substantial decrease in sales over the last two
years.
Marketing: The Company advertises its electroplating
services in trade magazines, brochures, catalogues, and newsletters
and by direct mail.
Item 2. Properties
The Company leases its administrative offices and
principal production facilities which consist of a 42,000 square
feet plant at 301 Commerce Road, Linden, New Jersey. The lease
expires on June 30, 2003. The net annual base rent is currently
$170,000 exclusive of supplemental rent for real estate taxes and
insurance to be paid by the Company under the terms of the lease.
The Company believes that its facility at 301 Commerce
Road is adequate for the operations of the Company.
Item 3. Pending Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of the
owners of the Company's securities during the fourth quarter of the
Company's fiscal year ended September 30, 1997.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
(a) Trading of Common Stock
The principal market on which the Company's common
stock is being traded is the over-the-counter market. Due to the
relatively small and declining number of shareholders of the
Company's stock, trading is infrequent and the public market for
the Company's stock is limited. The current bid price for the
stock is $3 per share and the current ask price is $4.50 per share.
(b) As of September 30, 1997, there were
approximately 538 shareholders of the Company's common stock.
(c) No cash dividends have been paid by the Company
during the past two years with respect to its common stock.
(d) The Company does not contemplate paying cash
dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis or Plan
of Operation
Sales
The Company's net sales were $3,909,868 in 1997. The
discussion regarding Bankruptcy, Competitive Conditions within Item
1, Narrative Description of Business, above is hereby incorporated
herein by reference.
Cost and Expenses
The Company's cost of sales was $3,540,568 in 1997.
The Company's factory overhead, all of which is included
in the cost of sales.
The Company's selling, general and administrative
expenses were $517,029 in 1997.
Loss or Income Before Federal and State Income Taxes
In 1997, the Company had a pre-tax net loss of $196,784
as compared to pre-tax net income of $648,901 in 1996.
Liquidity
The most significant element of uncertainty known to the
Company is the fluctuation in market prices of precious metals,
particularly gold, which are employed as raw materials in the
Company's business operations. This factor especially affects the
Company's liquidity due to its need to keep sizable inventories of
gold. To counteract its exposure to gold price fluctuations, the
Company has continued its policy of reducing its gold inventory to
the lowest practical level.
The Company's only significant internal source of
liquidity is its accounts receivable. The collectability period of
receivables, which generally averaged 45-60 days during the fiscal
year ended September 30, 1997 and was generally consistent with the
past operating history of the Company. Nevertheless, in 1997, the
Company experienced collectability periods in some cases of as long
as 90 days.
The Company's sole external source of liquidity has
historically been infrequent short-term borrowings in small
amounts. As the Company's major cash outlay requirement is for the
purchase of gold, its cash requirements are substantially
correlated to the Company's sales volume. Consequently, the
Company has historically been able to plan for the major portion of
its cash needs and accommodate those needs from internally
generated funds. However, in the most recent fiscal year, the
Company was required to borrow small amounts on a short-term basis
to make up for shortfalls in internally generated funds.
Capital Resources
In 1997, the Company did not make any major capital
expenditures.
Results of Operations
The only significant economic changes materially
affecting the results of operations of the Company are the
fluctuating price of gold and the continuing poor economic
condition of the domestic electronics industry, which has affected
the electroplating industry. With respect to gold, the amount of
such effect is difficult to estimate accurately, due to the wide
variations in prices. However, since gold presently constitutes a
substantial element of the Company's processes and is not subject
to ready substitution, the effect is considerable. As a
countermeasure to fluctuations in gold prices, the Company has
continued to attempt to broaden its customer base and figure its
job costs more precisely, thereby further enabling it to minimize
inventory. In that manner, the Company hopes to alleviate the
potentially severe effects upon its results of operations of
increased raw materials costs at a time when prices are being cut
throughout its industry.
With regard to the varying economic condition of the
domestic electronics industry, with its concomitant effect on the
domestic electroplating industry, the amount of such effect is also
difficult to estimate accurately. However, the Company believes
that the effect of such factor on the Company's results of
operations is considerable, especially in the fiscal year ended
September 30, 1997.
Item 7. Financial Statements and Supplementary Data
See Exhibits attached hereto. The Exhibit Index is
located at page 15 of this filing.
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act
(a) Directors
The names of the nominees for director, together with
certain information regarding them, are as follows:
Year
First
Name of Became Term Position
Directors (A) Age Director Expires With Company
Ronald Knigge 52 1997 April, 1998 Chairman,
President
and Chief
Executive
Officer
John R. Palumbo, 52 1979 April, 1998 Vice
Jr. (B) President
Ralph J. Pocaro 72 1997 April, 1998 Director
Alan VanNess 58 1997 April, 1998 Director
(A) There is not currently in force or effect any arrangement
pursuant to the terms of which any nominee has agreed to cause his
votes to be cast for the election of any other nominee or director.
(B) John R. Palumbo, Jr. has been associated with the Company for
the past twenty-four years. He has been involved with the
Company's production activities as well as having various
management responsibilities for the Company during the last
fourteen years. He had been Vice President of the Company before
initially being elected President in 1982. He served as President
until July, 1997, at which time he was elected as Vice President.
(c) Executive Officers
The executive officers of the Company are as
follows:
Position Period Served
with the as an Officer
Name Age Company (Director) to Date
Ronald Knigge 52 Chairman,President
and Chief Executive
Officer, Director 6 months
John R. Palumbo, 52 Vice-President, 6 months
Jr.
MaryLou Palumbo 50 Secretary/Treasurer 6 months
<PAGE>
Item 10. Executive Compensation
The aggregate remuneration paid or accrued by the Company
for the fiscal year ended September 30, 1997, with respect to each
director and officer whose direct remuneration from the Company
exceeded $60,000, and all directors and officers as a group is as
follows:
Name of Salaries,
individual Capacities directors' fees,
or number in which commissions,
in group served bonuses
John R. Vice President $78,944.00
Palumbo, Jr.
Jeffrey J. Vice $68,582.75
Palumbo President
________________________
No compensation was paid to the members of the Company's
Board of Directors for serving as Board members.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The Company has one class of capital stock, Common Stock,
$.10 Par Value, of which, as of September 30, 1997, 910,031 shares
were outstanding. Each outstanding share of Common Stock is
entitled to one vote.
(a) Security Ownership of Certain Beneficial Owners
The following chart sets forth, as of December 4, 1997,
information concerning the security ownership of those beneficial
owners who are known by the Company to own beneficially more than
5% of the Common Stock of the Company:
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
Common Sheridan Printing Co., Inc. 564,000 shares 61.97%
702 Hamilton Mall
Allentown, Pa. 18101
(b) Security Ownership of Management
As of September 30, 1997, there was no security
ownership by the management of the Company.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a)1. Financial Statements: Page
Independent Auditor's Report . . . . . .F-1
Balance Sheet . . . . . . . . . . . . . .F-2
Statement of Operations . . . . . . . . .F-3
Statement of Cash Flows . . . . . . . . .F-5
Statement of Stockholders' Equity . . . .F-4
Notes to Financial Statements . . . . . .F-6 to F-9
2. All other schedules are inapplicable or the required
information is included in the financial statements, the notes
thereto, or in the schedules included herein.
3. Exhibits
None.
(b) Reports on Form 8-K:
A report on Form 8-K was filed on August 7, 1997.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PLATRONICS,INC.
Registrant
Ronald Knigge
Date: December 29, 1997 Ronald Knigge, President
Mary Lou Palumbo
Date: December 29, 1997 Mary Lou Palumbo,
Principal Accounting
Officer
<PAGE>
PLATRONICS, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
[Savino, Cohen and Kaminer, L.L.C. Letterhead]
<PG$PCN>
PLATRONICS, INC.
INDEX TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
Page
Independent Auditor's Report
F-1
Financial Statements:
Balance Sheet
F-2
Statements of Operations
F-3
Statement of Stockholders' Equity
F-4
Statements of Cash Flows
F-5
Notes to the Financial Statements
F-6 to F-9
<PG$PCN>
[SAVINO, COHEN & KAMINER, L.L.C. LETTERHEAD]
Independent Auditor's Report
To the Board of Directors and Stockholders of
Platronics, Inc.
We have audited the accompanying balance sheet of Platronics, Inc.
as of
September 30, 1997 and the related statements of operations,
stockholders'
equity and cash flows for the years ended, September 30, 1997 and
1996. These
financial statements are the responsibility of the Company's
management. Our
responsibility is to express an opinion on these financial
statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements are
free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes
assessing the accounting principles used and significant estimates
made by
management, as well as evaluating the overall financial statement
presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in
all material respects, the financial position of Platronics, Inc.
as of
September 30, 1997, and the results of its operations and its cash
flows for the
years ended September 30, 1997 and 1996 in conformity with
generally accepted
accounting principles.
/s/SAVINO, COHEN &
KAMINER, L.L.C.
Roseland, New Jersey
October 29, 1997
F-1
<PG$PCN>
PLATRONICS, INC.
BALANCE SHEET
SEPTEMBER 30, 1997
ASSETS
<TABLE>
Current Assets:
<S>
<C>
Cash
$ 45,297
Trade receivables, less allowance for doubtful accounts of
$14,344 623,167
Inventory
402,177
Prepaid expenses
4,259
----------
Total Current Assets
1,074,900
Property and Equipment, net of accumulated depreciation
96,052
Other Assets:
Security deposit
34,165
----------
Total Assets
$1,205,117
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable - related party
$ 350,000
Accounts payable
97,304
Deferred rental obligations - current portion
5,834
----------
Total Current Liabilities
453,138
Deferred Rental Obligations - Long-Term
49,998
----------
503,136
Stockholders' Equity
Common stock, $.10 par value
Authorized - 2,000,000, shares issued - 910,031
91,003
Paid in additional capital
6,156
Retained Earnings
604,822
----------
Total Stockholders' Equity
701,981
----------
Total Liabilities and Stockholders' Equity
$1,205,117
==========
</TABLE>
See notes to the financial statements
F-2
<PG$PCN>
PLATRONICS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------
1997 1996
---- ----
Revenue:
<S>
<C> <C>
Sales
$ 3,909,868 $ 4,202,514
----------- -----------
Cost and expenses:
Cost of sales
3,540,568 3,491,799
Selling, general and administrative expenses
517,029 624,016
Depreciation and amortization
45,240 60,222
Interest expense
6,365 5,943
----------- -----------
4,109,202 4,181,980
----------- -----------
Income (loss) from operations before income taxes and
extraordinary item
(199,334) 20,534
Extraordinary item - gain on discharge of debt pursuant to Chapter
11
bankruptcy reorganization filing (net of tax effect of $0)
2,550 628,367
----------- -----------
Income (loss) before income taxes
(196,784) 648,901
----------- -----------
Provision for income taxes
-0- -0-
----------- -----------
Net income (loss)
$ (196,784) $ 648,901
----------- -----------
Earning (loss) per common share:
Income (loss) from operations
$ (.22) $ .02
Extraordinary item
-0- .69
----------- -----------
Net income (loss) per common share
$ (.22) $ .71
=========== ===========
Weighted average number of shares used in computing net income
(loss)
per common share
910,031 910,031
----------- -----------
</TABLE>
See notes to the financial statements
F-3
<PG$PCN>
PLATRONICS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 1, 1995 TO SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Common Stock
Paid In
Number
Additional Retained
of Shares Amount
Capital Earnings
<S> <C> <C>
<C> <C>
Balance at September 30, 1995 910,031 $ 91,003
$ 6,156 $ 152,705
Net income for the year -- --
-- 648,901
--------- ---------
--------- ---------
Balance at September 30, 1996 910,031 91,003
6,156 801,606
Net loss for the year -- --
-- (196,784)
--------- ---------
--------- ---------
Balance at September 30, 1997 910,031 $ 91,003
$ 6,156 $ 604,822
========= =========
========= =========
</TABLE>
See notes to the financial statements
F-4
<PG$PCN>
PLATRONICS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year
Ended September 30,
- ------------------------
1997 1996
- --------- ---------
<S> <C>
<C>
Cash flows from operating activities:
Net income (loss)
$(196,784) $ 648,901
- --------- ---------
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization
45,240 60,222
(Increase) Decrease in:
Accounts receivable
(199,870) (39,209)
Inventories
66,630 (25,038)
Prepaid expenses
3,273 (2,634)
Increase (Decrease) in:
Accounts payable
7,332 (603,585)
Payroll taxes payable
(19,981) 14,305
Accrued expenses
(13,512) (28,065)
Deferred rental obligations
7,499 31,668
- --------- ---------
Total adjustments
(103,389) (592,336)
- --------- ---------
Net cash provided (used) by operating activities
(300,173) 56,565
- --------- ---------
Cash flows from investing activities:
Capital expenditures
(3,257) (9,912)
- --------- ---------
Net cash (used) by investing activities
(3,257) (9,912)
- --------- ---------
Cash flows from financing activities:
Repayment of long-term debt
(81,373) (24,586)
Proceeds from note payable
350,000 -0-
- --------- ---------
Net cash provided (used) by financing activities
268,627 (24,586)
- --------- ---------
Net Increase (Decrease) in Cash
(34,803) 22,067
Cash-Beginning of Year
80,100 58,033
- --------- ---------
Cash-End of Year $
45,297 $ 80,100
========= =========
</TABLE>
See notes to the financial statements
F-5
<PG$PCN>
PLATRONICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) ORGANIZATION
Platronics, Inc. (the "Company") was incorporated in New
Jersey on
September 28, 1946. The Company is primarily engaged in
the business of
precision electroplating of electrical and electronic
components and
semiconductor products used in computers, data processing
and
communications equipment, and microwave transmission
equipment.
(b) BASIS OF ACCOUNTING
The Company's policy is to prepare its financial statement
on the
accrual method of accounting. On November 23, 1993 the
Company filed
for bankruptcy under Chapter 11. The Company submitted a
plan of
reorganization which was approved on June 25, 1996.
(c) INVENTORY
Inventory, consisting primarily of plating materials, are
valued at the
lower of cost or market, cost being determined on a
first-in, first-out
(FIFO) basis.
(d) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated
over their
estimated useful lives using the straight line method.
Estimated useful
lives are as follows:
Machinery and Equipment 7 to 12 Years
Automobile and Trucks 3 to 5 Years
Furniture and Fixtures 7 to 10 Years
Leasehold Improvements 10 to 20 Years
Maintenance, repairs, and minor replacements are expenses
as incurred.
Cost of major replacements and renewals are capitalized.
Upon
retirement or other dispositions of property or equipment,
the cost and
accumulated deprecation are removed from the accounts and
any gain or
loss on disposition is recognized currently.
(e) USE OF ESTIMATES
Preparation of financial statements in conformity with
generally
accepted accounting principles requires management to make
estimates
and assumptions that effect the reported amounts of assets
and
liabilities and disclosure of contingent assets and
liabilities at the
date of the financial statements and the reported amounts
of revenues
and expenses during the reported period. Actual results
could differ
form those estimates.
F-6
<PG$PCN>
PLATRONICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) INCOME TAXES
The Company accounts for income taxes in accordance with
SFAS No. 109.
Income taxes are provided for the tax effects of
transactions reported
in the financial statements and consists of taxes
currently due plus
deferred taxes related primarily to net operating loss
carryforwards.
(g) EARNINGS (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed by dividing
the net
income (loss) by the weighted average number of shares of
common stock
outstanding during the period. The Company maintains a
simple capital
structure and has no common stock equivalents.
CONCENTRATION OF BUSINESS AND CREDIT RISK
The majority of the Company's inventory is purchased from one
supplier. The
Company is subject to risk to the extent a supplier cannot satisfy
the Company's
purchase requirements. The Company sometimes must buy the precious
metals it
uses for plating materials in significant quantities. Such
purchases require
substantial periodic outlays of working capital. The Company is at
risk to the
extent that available working capital can not meet the demand for
inventory
purchases.
The Company provides credit in the normal course of business to
customers. The
Company performs ongoing credit evaluations of its customers and
maintains
allowances for doubtful accounts based on factors surrounding the
credit risk of
specific customers, historical trends and other information.
Approximately sixty
percent (60%) of the accounts receivable are from three customers.
Working
capital needs are funded through the collection of accounts
receivable and
consequently, the Company is at risk to the extent that accounts
receivable are
collected according to the terms provided.
The Company maintains cash balances in financial institutions.
Accounts at each
institution are insured by the Federal Deposit Insurance
Corporation up to
$100,000. At September 30, 1997, the Company's uninsured cash
balances total
$55,169.
CASH FLOWS INFORMATION
Supplemental disclosure of cash flows information:
<TABLE>
<CAPTION>
Year Ended
September 30,
- ------------------------
1997
1996
----
----
<S> <C>
<C>
Interest Paid $6,365
$5,943
</TABLE>
COMMITMENTS
The Company conducts its operation in a leased facility under a
net, net, net lease. The lease is noncancelable and expires on June
20, 2003. The lease has been amended subsequent to the balance
sheet date and the future minimum commitments, as amended, are as
follows:
F-7
<PG$PCN>
PLATRONICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
COMMITMENTS (CONTINUED)
<TABLE>
September 30,
<S> <C>
1998 $ 170,000
1999 170,000
2000 170,000
2001 170,000
2002 170,000
Thereafter 99,167
-----------
$ 949,167
===========
</TABLE>
The above rental commitments reflect the periods during which the
actual
obligations arise (per lease agreement). Rental expense has been
charged to
operations on a straight line basis which amounted to $160,000 for
each year
ended September 30, 1997 and 1996. The associated liability is
presented in the
balance sheet as a current and long-term deferred rental obligation
liability of
$5,834 and $49,998 respectively.
PROPERTY AND EQUIPMENT
The components of property and equipment at September 30, 1997 are
as follows:
<TABLE>
<S> <C>
Machinery and equipment $1,494,580
Automobiles and trucks 6,389
Furniture and fixtures 89,028
Pollution control equipment 169,749
Leasehold improvements 562,754
----------
Total property and equipment 2,322,500
Less: accumulated depreciation 2,226,448
----------
Property and Equipment, Net $ 96,052
==========
</TABLE>
NOTE PAYABLE - RELATED PARTY
Note payable represents an unsecured loan from a shareholder owning
a majority
of the outstanding stock. The note is payable on September 30, 1998
with
interest only at 8% paid quarterly.
INCOME TAXES
As of September 30, 1997, a federal loss carry forward of
$1,080,421 and a state
loss carry forward of $1,396,143 are available to offset future
taxable income.
The Company's total deferred tax asset and valuation allowance at
September 30,
1997 is as follows:
<TABLE>
<S> <C>
Total deferred tax asset $ 450,000
Less valuation allowance 450,000
-----------
Net deferred tax asset $ -0-
===========
</TABLE>
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PLATRONICS, INC.
NOTES TO THE FINANCIAL STATEMENTS
EXTRAORDINARY ITEM
Pursuant to the Plan of Reorganization, under a Chapter 11
bankruptcy filing
dated June 25, 1996, the Company agreed to settle for 8% on the
unsecured
claims. The total settlement of $80,000 which included both secured
and
unsecured claims resulted in the company recognizing income in the
amount of
$2,550 and $628,367 for the years ended September 30, 1997 and
1996,
respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash, trade receivables, accounts payable and accrued expense, and
notes
payable:
The carrying amount approximates fair value because of the short
maturity of
these instruments.
Limitations:
Fair value estimates are made at a specific point in time, based on
relevant
market information and information about the financial instrument.
These
estimates are subjective in nature and involve uncertainties and
matters of
significant judgment and therefore cannot be determined with
precision. Changes
in assumptions could significantly affect the estimates.
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