19
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES ACT OF 1934
For the fiscal quarter ended January 31, 1997 Commission file number 0-14361
TROPIC COMMUNICATIONS, INC.
(Exact Name of Company as Specified in Its Charter)
Delaware 31-1166419
(State or other jurisdiction of (I. R. S.Employer I. D. Number)
incorporation or organization)
3021 Bethel Road, Suite 208, Columbus, Ohio 43220
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (614) 538-0660
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 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 ____
The Company has 3,850,166 shares of $0.15 par value common stock outstanding as
of February 28, 1997.
<PAGE>
<TABLE>
<CAPTION>
TROPIC COMMUNICATIONS, INC.
FORM 10-Q
For the Quarter Ended January 31, 1997
INDEX
Part I: Financial Information
<S> <C>
Page
Item 1.
Financial Statements
(a) Consolidated Balance Sheets as of January 31, 1997
and April 30, 1996 3
(b) Statement of Consolidated Operations for the Three
Months Ended January 31, 1997 and 1996 4
(c) Statement of Consolidated Operations for the Nine
Months Ended January 31, 1997 and 1996 5
(d) Statement of Consolidated Cash Flow for the Nine
Months Ended January 31, 1997 and 1996 6
(e) Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibit Index and Reports on Form 8-K 13
Signatures 19
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PART I
Item 1. Financial Statements
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, April 30,
1997 1996
<S> <C> <C>
Assets:
Cash $ 1,436 $ 14,021
Deposits and accounts receivable (net of allowance
for doubtful accounts of $2,500 and $5,800,
respectively) 30,232 46,300
Residual notes receivable 1,967 5,000
Equipment notes and accrued interest receivable 4,082,397 14,937,756
Leased property under capital lease, at cost (net
of accumulated amortization of $14,257,774 and
$99,288,753, respectively) - -
Property and equipment, at cost (net of accum-
ulated depreciation of $555,631 and 513,934,
respectively) 356,467 393,002
Cost in excess of net assets acquired (net of
accumulated amortization of $1,651,721 and
$1,488,138, respectively) 1,593,663 1,757,246
Investment in partnerships 45,498 45,498
Investment in unconsolidated affiliates 800,800 500
Broadcasting rights 35,228 93,471
Other assets 47,955 56,299
----------- -----------
Total Assets $ 6,995,643 $17,349,093
=========== ===========
Liabilities:
Accounts payable and accrued expenses $ 232,284 $ 282,025
Notes payable and accrued interest payable -
related parties 298,798 263,845
Notes payable and accrued interest payable 550,920 511,685
Broadcasting rights 35,228 93,471
Capital lease obligation and accrued interest payable 4,082,397 14,938,702
Accrued officer compensation and accrued interest
payable 586,477 342,943
Unearned income 1,366 1,366
----------- -----------
Total Liabilities 5,784,470 16,434,037
----------- -----------
Shareholders' Equity:
Preferred stock, $0.01 par value, 1,000,000
shares authorized none issued and outstanding
Common stock, $0.15 par value, 50,000,000 shares
authorized, 3,852,566 and 3,254,566 shares
issued, respectively 577,885 488,185
Paid in capital 9,000,738 8,672,987
Retained deficit (8,355,862) (8,234,528)
----------- -----------
1,222,761 926,644
Treasury stock, at cost, 2,400 shares (11,588) (11,588)
----------- -----------
Total Shareholders' Equity 1,211,173 915,056
----------- -----------
Total Liabilities and Shareholders' Equity $ 6,995,643 $17,349,093
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Operations
Three Months Ended January 31,
------------------------------
1997 1996
<S> <C> <C>
Revenues:
Rental income $ 2,492 $ 51,488
Commissions, fees, advertising and other income 87,071 110,835
Interest income 138,807 760,530
---------- ----------
Total Revenues 228,370 922,853
---------- ----------
Cost and Expenses:
Marketing, administrative and other operating
expenses 238,570 214,889
Advisory services - -
Interest expense - related parties 22,224 14,512
Interest expense 152,833 1,346,973
Depreciation and amortization of property,
equipment and leased property under capital
lease 12,970 (509,973)
Amortization of cost in excess of net assets
acquired and other intangible assets 57,628 57,628
---------- ----------
Total Costs and Expenses 484,225 1,124,029
---------- ----------
Net income (loss) $ (255,855) $ (201,176)
========== ==========
Primary Net Income (Loss) Per Share $ (0.07) $ (0.07)
========== ==========
Fully Diluted Net Income (Loss) Per Share $ (0.07) $ (0.07)
========== ==========
Average Number of Common and
Common Equivalent Shares:
Primary 3,850,166 2,748,473
Fully diluted 3,850,166 2,748,473
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Operations
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Revenues:
Rental income $ 7,432 $1,321,694
Commissions, fees, advertising and other income 1,081,845 463,277
Interest income 715,418 2,583,388
---------- ----------
Total Revenues 1,804,695 4,368,359
---------- ----------
Cost and Expenses:
Marketing, administrative and other operating
expenses 801,319 825,682
Advisory services 92,450 -
Interest expense - related parties 60,276 30,007
Interest expense 757,404 2,685,899
Depreciation and amortization of property,
equipment and leased property under capital
lease 41,697 1,323,712
Amortization of cost in excess of net assets
acquired and other intangible assets 172,883 172,883
---------- ----------
Total Costs and Expenses 1,926,029 5,038,183
---------- ----------
Net income (loss) $ (121,334) $ (669,824)
========== ==========
Primary Net Income (Loss) Per Share $ (0.03) $ (0.27)
========== ==========
Fully Diluted Net Income (Loss) Per Share $ (0.03) $ (0.27)
========== ==========
Average Number of Common and
Common Equivalent Shares:
Primary 3,632,657 2,470,993
Fully diluted 3,632,657 2,470,993
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Cash Flows
Increase in Cash and Cash Equivalents
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Cash Flows From Operating Activities:
Rental income $ 7,432 $ 7,279
Commissions, fees, advertising and other receipts 185,484 201,421
Marketing, administrative and other operating
payments (610,112) (577,991)
Interest receipts 3,096 342
Interest payments (5,473) (99,567)
---------- ----------
Net Cash Used For Operating Activities (419,573) (468,516)
---------- ----------
Cash Flows From Investing Activities:
Purchases of property and equipment (5,162) (436)
Investment in unconsolidated affiliates (300) -
---------- ----------
Net Cash Used For Investing Activities (5,462) (436)
---------- ----------
Cash Flows From Financing Activities:
Proceeds from issuance of stock 417,451 375,839
Issuance of stock - 272,736
Proceeds from officer loans - 11,500
Proceeds from related party loans 6,858 -
Proceeds from other borrowings 25,000 -
Principal payment on other borrowings (21,500) (187,356)
Principal payment on officer loan (11,500) -
Principal payments on radio acquisition financing - (2,726)
Principal payments on capital lease obligation
and other financing (3,859) (4,456)
---------- ----------
Net Cash Provided By Financing Activities 412,450 465,537
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents (12,585) (3,415)
Cash and Cash Equivalents at Beginning of Period 14,021 4,180
---------- ----------
Cash and Cash Equivalents at End of Period $ 1,436 $ 765
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Cash Flows
Reconciliation of Net Loss to
Net Cash Used For Operating Activities
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Net income (loss) $ (121,334) $ (669,824)
---------- ----------
Adjustment to reconcile net loss to net cash
used for operating activities:
Expenses and revenues not affecting operating
activities:
Depreciation and amortization of equipment,
cost in excess of net assets acquired and
other intangible assets 214,580 1,496,595
Deferred costs expensed - 1,600
Rental income - (1,314,914)
Leasing interest income (714,422) (2,580,812)
Leasing interest expense 714,422 2,627,868
Fee income recognized from stock retained in
unconsolidated affiliates (800,000) -
Changes in assets and liabilities:
Changes in accrued interest income 2,100 (2,234)
Changes in accrued interest expense 97,785 (11,529)
Changes in residual notes and accounts receivable 17,001 (77,999)
Changes in other assets (956) 2,237
Changes in notes and accounts payable and accrued
expenses 171,251 61,315
Equipment acquired by barter transactions - (1,875)
Other - 1,056
---------- ----------
Total Adjustments (298,239) 201,308
---------- ----------
$ (419,573) $ (468,516)
========== ==========
</TABLE>
Supplemental Cash Flow Information
Investment in Finance Assets. The Company acquires leases of equipment and
leases receivable partially by assuming existing financing. Also, the Company
may sell or dispose of such assets with a commensurate transfer of any related
financing to the transferee. During the nine months ended January 31, 1997
leasehold tenancy positions terminated which reduced the gross value of Leased
Property Under Capital Lease by $85,030,979 and accumulated amortization by an
equivalent amount. There were no acquisitions or disposals of equipment lease
portfolio assets in the nine months ended January 31, 1997.
See accompanying notes to consolidated financial statements.
7
<PAGE>
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Consolidated Financial Statements
The consolidated balance sheet as of January 31, 1997, the statement of
consolidated operations for the three and nine months ended January 31, 1997,
and the statement of consolidated cash flows for the three and nine months ended
January 31, 1997, have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at January 31, 1997, and for all periods presented,
have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's April 30, 1996 and 1995, annual Report
to the Securities and Exchange Commission on Form 10-K.
2. Services Agreements
On May 21, 1996, the Company entered into an agreement with The Flood Group,
incorporated ("Flood") and its shareholders whereby the Company was engaged to
provide administrative, staffing, accounting and communications services. For
its services, the Company received $20,000 in cash plus 90,000 shares of the
common stock of CyberSense Systems Corporation ("CyberSense"), a newly formed
holding company owning 100% of the outstanding common stock of Flood. The
Company believes that the value of its services to be $355,000, of which
$335,000, being the value of its shares of CyberSense common stock, has been
recorded as income in the current period. The remaining $20,000 was received in
cash on September 3, 1996. In business since the early 1980s, Flood markets,
installs and services proprietary software, the SENTINEL(TM) Noise Monitoring
System, and systems for airports and heavy industrial facilities to monitor and
manage the impact of noise. Flood also provides noise monitoring products to the
cellular and wireless communications providers. Flood has installed or upgraded
noise management/abatement facilities for the Los Angeles Department of Airports
(LA International, Ontario International and Van Nyes airports),
Sarasota-Bradenton (Florida) and the Seattle-Tacoma International Airports. The
airport noise abatement market is estimated at $450 million worldwide with $150
million in North America, two-thirds of that in the United States.
On May 22, 1996, the Company entered into an agreement with ICCS, Inc.
("ICCS") and its shareholders whereby the Company was engaged to provide
administrative, staffing, accounting and communications services. For its
services, the Company will receive $40,000 in cash plus 125,000 shares of the
common stock of ICCS Solutions, Inc. a newly formed holding company owning 100%
of the outstanding common stock of ICCS. The Company believes that the value of
its services to be $505,000 and has recorded income of $465,000, representing
the value of its shares of ICCS Solutions, Inc. common stock, in the current
period, plus $40,000 of cash to be received. ICCS, in business since 1981,
provides data processing software development and computer network installation
services and is the exclusive United States distributor for "QL Financial" which
is a client/server based financial software application for accounting,
distribution and manufacturing. The software was developed by MicroCompass,
Ltd., Seansea, Wales, United Kingdom. This software has been ISO 9000 certified
by KMPG Peat Marwick and is presently operating in ten sites in the United
Kingdom.
The Company has provided each of these companies with administrative and
accounting services including the services of its principal executive officers
who serve as officers and directors of each company and who also own
collectively 60,000 shares of the common stock of CyberSense and 165,000 shares
of the common stock of ICCS Solutions. The Company has also entered into a Stock
Registration Agreements with ICCS Solutions and CyberSense which provides for
the registration of the shares of common stock held by the Company.
The Company has recorded its receipt of the shares of common stock in these
companies (see balance sheet caption "Investment in unconsolidated affiliates")
at the value attributable to the services it has provided and will account for
its investment in such securities using the lower of cost or market method of
accounting. Each company is in the process of expanding its business activities
and financing the costs of its expansion which financings will require each
company to issue additional debt or equity securities which may have either a
8
<PAGE>
positive or adverse effect on the value of the Company's shares of each. The
Company will evaluate the value of these securities annually and may if
circumstances dictate, write down, but not up, the value of these securities.
The Company does not intend to operate as an investment company and subject
itself to regulation under the Investment Company Act of 1940. It therefore,
will not, among others, engage in the business of investing, reinvesting,
owning, holding or trading in securities or own or acquire investment securities
(defined in the Investment Company Act as all securities other than government
securities, securities issued by employees' securities companies, and securities
issued by majority-owned subsidiaries of the owner which are not investment
companies) having a value exceeding 40% of the value of the Company's total
assets (exclusive of government securities and cash items) on an unconsolidated
basis.
3. Earnings Per Share
For the three and nine months ended January 31, 1997, primary and fully
diluted earnings per share amounts, are computed based on 3,850,166 shares and
3,632,657 shares, respectively, the weighted average number of common shares
outstanding. Included in the weighted average number of common shares
outstanding at January 31, 1997 are 598,000 shares issued upon the exercise of
stock options granted under consulting agreements. If these shares had been
issued at the beginning of the period, primary and fully diluted loss per share
would have been ($0.03).
For the three and nine months ended January 31, 1996, primary and fully
diluted earnings per share amounts are computed based on 2,748,473 shares and
2,470,993 shares, respectively, the weighted average number of common shares
outstanding. Included in the weighted average number of common shares
outstanding at January 31, 1996 are 370,560 shares issued upon the exercise of
stock options granted under consulting agreements; a net increase of 17,334
shares as a result of the issuance of 24,000 shares at $.3125 per share, to an
officer upon exercise of employee stock options in exchange for 6,666 shares of
the Company's common stock, which were retired; and, the issuance of 453,836
shares to replace 226,768 collateral shares, valued at $272,736, of the
Company's common stock owned by its Chief Executive Officer, surrendered, under
court order, to certain secured noteholders, pursuant to the terms of a Pledge
Agreement between the Company and its Chief Executive Officer. If these shares
had been issued at the beginning of the period, primary and fully diluted loss
per share would have been ($0.23).
The employee stock options and other stock options granted are not included
in primary or fully diluted earnings per share for the three and nine months
ended January 31, 1997 and 1996 as the effect of including the options would be
anti-dilutive.
4. Advertising Revenue and Barter Transactions
During the nine months ended January 31, 1997 and 1996 the Company recognized
$247,225 and $417,071 of advertising revenue, respectively, which is included in
commissions, fees, advertising and other income. Such advertising revenue
included $116,662 and $270,387 of barter transaction revenue in 1997 and 1996,
respectively. Also, the Company recognized $116,662 and $268,512 of barter
transaction expense, respectively, which is included in marketing,
administrative and other operating expenses. The amount of goods and services
which were received or used prior to the transmission of advertising was
insignificant as of the balance sheet date.
5. Employee Stock Option Plans
The following table sets forth: (1) the number of shares of the Company's
common stock issuable at January 31, 1997 pursuant to outstanding Options; (2)
the exercise price per share; (3) the aggregate exercise price: (4) the
expiration dates; and (5) the market values of such shares at January 31, 1997,
based on $.8125 per share, which is the average of the high and low ask and bid
prices on the OTC Bulletin Board at January 31, 1997.
<TABLE>
<CAPTION>
Number of
Shares Market
Covered By Exercise Aggregate Value at
Outstanding Price Per Exercise Expiration January
Plan Options Share Price Dates 31, 1997
- --------------------------- ----------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Incentive Stock Option Plan 30,000 $ 0.3125 $ 9,375 07/15/03 $24,375
Incentive Stock Option Plan 67,167 $ 0.3125 $ 20,990 01/06/05 $54,573
</TABLE>
9
<PAGE>
On September 30, 1996, 333 Incentive Stock Option Plan options were
terminated. All Options are currently exercisable. However, there were no
Options exercised during the current period.
6. Other Stock Options
On May 16, 1996, the Company granted options under an Option Agreement
related to a service agreement with an attorney for options on 340,000 shares of
common stock at $1.00 per share. The optionee exercised options for all 340,000
shares on July 2, 1996 for a total of $340,000 in cash.
Under the terms of a marketing agreement with a radio marketing company, the
Company agreed to issue 258,000 free trading shares of the Company's common
stock for promotional services covering the six month term of the agreement. The
Company had suspended the agreement and on September 12, 1996, the Company and
the marketer mutually agreed to terminate the agreement. The Company has issued
47,000 shares of common stock in full settlement for services rendered and
costs, valued at $35,250, incurred by the marketer in connection with the
agreement. This settlement is reflected in these financial statements as if the
settlement had occurred on May 1, 1996.
On October 31, 1996, the Company issued 211,000 shares of common stock valued
at $42,200 in connection with advisory services rendered.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Company's reductions in rental income (99%), interest income (72%),
interest expense (70%) and depreciation and amortization expense (86%) for the
first nine months of fiscal 1997 compared to the same period of fiscal 1996 is a
result of a substantial reduction, through normally scheduled payoff, in the
number of lease portfolios compared with the number of leases operative in the
first nine months of the prior fiscal year. The Company has not undertaken any
new equipment lease portfolio acquisitions in the first nine months of 1997 or
1996.
The change in revenues from commissions, fees, advertising and other income
can be attributed to an increase of $800,000 for administrative and consulting
fees recognized in connection with mergers (see Note 2 - Notes to Consolidated
Financial Statements) consummated during the first fiscal quarter 1997 and a
decrease of approximately $189,000 in advertising revenues as a result of the
termination of its agreement to operate radio stations WMOG-AM and WMOG-FM
located in Brunswick, Georgia, effective July 31, 1995.
Marketing, administrative and other expenses increased approximately 8% in
the nine months ended January 31, 1997 compared to the same period last year.
The components of the change include increases in advisory services of $92,450
and officer compensation, reinstated in the fourth quarter of fiscal 1996 after
being suspended during fiscal 1995, of $233,580, and a decrease of approximately
$211,000 related to the operation of the Georgia radio stations and the
Company's ongoing efforts to reduce or eliminate administrative and operating
expenses.
Liquidity and Capital Resources
During the nine months ended January 31, 1997, the Company incurred a loss of
$121,334 which includes non-cash activity of $298,239. The result is a cash
loss from operations of $419,573 which was funded by proceeds from the exercise
of options for the purchase of the Company's common stock.
The Company has met its operating needs from revenues, the management of
trade and other credit and proceeds received from the exercise of options for
the purchase of shares of common stock. The Company is actively seeking business
acquisition and other business combination or other transaction opportunities
from which it can earn fees and other income. The Company is preparing proposals
to undertake several additional business investment, acquisition or combination
transactions, and if successful, estimates that it will earn substantial fees
and revenues for the fiscal year ending April 30, 1997, although there can be no
assurance the Company can earn any income from these or other undertakings for
the fiscal year ending April 30, 1997.
As of the date of this report, the Company's obligations consist of
approximately $230,000 in accounts payable and accrued expenses, $184,400 in
term notes payable and accrued interest in respect of WLTT-FM, $53,400 in other
notes payable and accrued interest to a Trust in which the Company's C.E.O. is a
co-trustee, $310,000 due in respect of Bridge Notes held by affiliates or
parties cooperative with the Company and the remaining balance of Bridge Notes
held by members of the Generation Capital Associates investor group ("GCA
Group"). As to the Bridge Note obligations, on or about March 11, 1996, the GCA
Group was granted a summary judgment on its claim for liability and dismissing
the Company's counter-claims. As a part of this order, the GCA Group was ordered
to produce their responses to the Company's requests for discovery, which the
Company expects will demonstrate that the notes have been paid. Although GCA
Group has yet to produce the discovery, the Company expects to appeal the
summary judgment and that it will re-institute its counter-claims against the
GCA Group. The Company anticipates that it will cooperatively work out the
repayment of the other Bridge Notes and will meet its other obligations in the
ordinary course of its business.
11
<PAGE>
<TABLE>
<CAPTION>
PART II
<S> <C>
Page
Item 4. Submission of Matters to Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11. Computation re: earnings per share,
attached hereto as Exhibit 11 13
(b) Reports on Form 8-K
None
</TABLE>
12
<PAGE>
Item 6.
(a) Exhibit 11. Earnings Per Share:
Computation of Primary Earnings Per Share. A computation of fully
diluted earnings per share is not presented as it is the same as the computation
of primary earnings per share.
<TABLE>
<CAPTION>
Primary Earnings Per Share:
Three Months EndedJanuary 31,
-----------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,850,166 2,748,473
Shares assumed to be issued upon exercising
of stock purchase rights - -
---------- ----------
Average number of common and common
equivalent shares 3,850,166 2,748,473
========== ==========
Net income (loss) $ (255,855) $ (201,176)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
---------- ----------
Adjusted net income (loss) $ (255,855) $ (201,176)
========== ==========
Net income (loss) per common share $ (0.07) $ (0.07)
========== ==========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Primary Earnings Per Share:
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,632,657 2,470,993
Shares assumed to be issued upon exercising
of stock purchase rights - -
---------- ---------
Average number of common and common
equivalent shares 3,632,657 2,470,993
========== ==========
Net income (loss) $(121,334) $(669,824)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
---------- ---------
Adjusted net income (loss) $ (121,334) $(669,824)
========== =========
Net income (loss) per common share $ (0.03) $ (0.27)
========== =========
</TABLE>
Notes regarding the calculation of primary earnings per share:
For the three and nine months ended January 31, 1997 and 1996 shares issuable
under stock purchase rights, are not included in primary or fully diluted
earning since the inclusion would be anti-dilutive.
Included in the weighted average number of common shares outstanding at
January 31, 1997 are 598,000 shares issued pursuant to exercise of stock options
granted under consulting agreements. Included in the weighted average number of
common shares outstanding at January 31, 1996 are 370,560 shares issued upon the
exercise of stock options granted under consulting agreements; a net increase of
17,334 shares as a result of the issuance of 24,000 shares a $.3125 per share,
to an officer upon exercise of employee stock options in exchange for 6,666
shares of the Company's common stock, which were retired; and, the issuance of
453,836 shares to replace 226,768 collateral shares, valued at $272,736, of the
Company's common stock owned by its Chief Executive Officer, surrendered, under
court order, to certain secured noteholders, pursuant to the terms of a Pledge
Agreement between the Company and its Chief Executive Officer.
If these shares had been issued at the beginning of the nine month periods,
primary and fully diluted earnings per share would have been $(0.03) and $(0.23)
in 1997 and 1996, respectively.
14
<PAGE>
Additional primary and fully diluted earnings per share computations pursuant
to Regulation S-K, CFR Section 229.601(b)(11): The following computations are
submitted for informational purposes only pursuant to Regulation S-K, although
they are contrary to APB15.
<TABLE>
<CAPTION>
Primary Earnings Per Share (Additional):
Three Months Ended January 31,
------------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,850,166 2,748,473
Shares assumed to be issued upon exercising
of stock purchase rights 44,183 41,325
---------- ----------
Average number of common and common
equivalent shares 3,894,349 2,789,798
========== ==========
Net income (loss) $ (255,855) $ (201,176)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
---------- ----------
Adjusted net income (loss) $ (255,855) $ (201,176)
========== ==========
Net income (loss) per common share $ (0.07) $ (0.07)
========== =========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Primary Earnings Per Share (Additional):
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,632,657 2,470,993
Shares assumed to be issued upon exercising
of stock purchase rights 156,438 155,435
---------- ----------
Average number of common and common
equivalent shares 3,789,095 2,626,428
========== ==========
Net income (loss) $ (121,334) $ (669,824)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
---------- ----------
Adjusted net income (loss) $ (121,334) $ (669,824)
========== ==========
Net income (loss) per common share $ (0.03) $ (0.26)
========== ==========
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Fully Diluted Earnings Per Share (Additional):
Three Months Ended January 31,
------------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,850,166 2,748,473
Shares assumed to be issued upon exercising
of stock purchase rights 59,800 65,505
---------- ----------
Average number of common and common
equivalent shares 3,909,966 2,813,978
========== ==========
Net income (loss) $ (255,855) $ (201,176)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
----------- ----------
Adjusted net income (loss) $ (255,855) $ (201,176)
=========== ==========
Net income (loss) per common share $ (0.07) $ (0.07)
=========== ==========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Fully Diluted Earnings Per Share (Additional):
Nine Months Ended January 31,
-----------------------------
1997 1996
<S> <C> <C>
Weighted average number of common shares
outstanding 3,632,657 2,470,993
Shares assumed to be issued upon exercising
of stock purchase rights 227,822 185,857
---------- ----------
Average number of common and common
equivalent shares 3,860,479 2,656,850
========== ==========
Net income (loss) $ (121,334) $ (669,824)
Increase in interest income (net of tax)
from assumed investment in certificates
of deposit and decrease in interest expense
(net of tax) for assumed payment of short-
term debt with assumed stock purchase
right proceeds in excess of 20% repurchase
limitation - -
---------- ---------
Adjusted net income (loss) $ (121,334) $(669,824)
========== =========
Net income (loss) per common share $ (0.03) $ (0.25)
========== =========
</TABLE>
Notes regarding the calculation of primary and fully diluted earnings per share
pursuant to Regulation S-K, CFR Section 229.601(b)(11):
For the nine months ended January 31, 1997 and 1996, primary earnings per
share includes the exercise of stock purchase rights is assumed at the beginning
of the period or the date of grant, if granted during the period. Pursuant to
the treasury stock method shares assumed to be issued upon exercising of stock
purchase rights represents the number of shares issued upon assumed exercise
less shares repurchased at the average market price.
For the nine months ended January 31, 1997 and 1996, fully diluted earnings
per share is computed under the aforementioned method as primary earnings per
share, except the repurchase of shares uses the higher of the average market
price during the period or the ending market price, unless shares are actually
issued pursuant to exercise, then the average market price on the day of
exercise is used.
Included in the weighted average number of common shares outstanding at
January 31, 1997 are 598,000 shares issued pursuant to exercise of stock options
granted under consulting agreements. Included in the weighted average number of
common shares outstanding at January 31, 1996 are 370,560 shares issued upon the
exercise of stock options granted under consulting agreements; a net increase of
17,334 shares as a result of the issuance of 24,000 shares a $.3125 per share,
to an officer upon exercise of employee stock options in exchange for 6,666
shares of the Company's common stock, which were retired; and, the issuance of
453,836 shares to replace 226,768 collateral shares, valued at $272,736, of the
Company's common stock owned by its Chief Executive Officer, surrendered, under
court order, to certain secured noteholders, pursuant to the terms of a Pledge
Agreement between the Company and its Chief Executive Officer. If these shares
had been issued at the beginning of the periods, primary and fully diluted
earnings per share would have been ($0.03) and ($0.23) in 1997 and 1996,
respectively.
(b) Reports on Form 8-K
None
18
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934 the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TROPIC COMMUNICATIONS, INC.
(Registrant)
/s/ JOHN E. RAYL
Date: March 17, 1997 By:__________________________________
JOHN E. RAYL
Chief Executive Officer,
President and Treasurer
(Principal Financial Officer)
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL SUMMARY INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE STATEMENT OF CONSOLIDATED OPERATIONS AND
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000791027
<NAME> Tropic Communications, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,436
<SECURITIES> 0
<RECEIVABLES> 4,117,096
<ALLOWANCES> (2,500)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,169,872
<DEPRECIATION> (14,813,405)
<TOTAL-ASSETS> 6,995,643
<CURRENT-LIABILITIES> 5,784,470
<BONDS> 0
0
0
<COMMON> 577,885
<OTHER-SE> 633,288
<TOTAL-LIABILITY-AND-EQUITY> 6,995,643
<SALES> 0
<TOTAL-REVENUES> 1,804,695
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,108,349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 817,680
<INCOME-PRETAX> (121,334)
<INCOME-TAX> 0
<INCOME-CONTINUING> (121,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,334)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
