SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
QUARTER REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Unaudited)
For the Quarter Ended
August 31, 1995 Commission File No. 0-5141
PRINCETON ELECTRONIC PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1848644
(State or other jurisdiction of (IRS Employer Iden-
incorporation or organization) tification Number)
2222 East Camelback Road, Suite 200, Phoenix, AZ 85016
(Address of principal executive offices)
(602) 954 2600
(Registrant's telephone number, including area code)
- -----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the Registrant (l) 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, as of the close of the period covered by
this report.
14,981,622
PRINCETON ELECTRONIC PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited Audited
Q/E Y/E
8/31/95 5/31/95
CURRENT ASSETS ---------- ----------
Cash $ 1,505 $ 49,057
Available for securities 279,779 245,079
Accounts Receivable:
-Hair Care Division 55,274 118,719
Notes receivable:
-Related Parties, Officers 45,000 45,000
Inventory
-Hair Care Division 135,027 97,082
Prepaid Expenses 87,015 69,444
Investment in Commission Contract Current 11,380 11,380
--------- ---------
TOTAL CURRENT ASSETS $614,980 $635,761
--------- ---------
Note receivable - affiliate 286,765 286,765
Note Receivable - Hair Care Division 125,000 125,000
Note Receivable - Officers 144,000 144,000
Officers' & Stockholders' Adv 468,906 398,906
Property & equipment (Net) 1,489,422 1,495,703
Investment in Restricted Securities 250,000 250,000
Investment in Real Estate 225,000 225,000
Investment in Commission Contract
Long Term 172,925 112,436
Goodwill 130,500 130,500
Deposits 28,090 37,449
--------- ---------
TOTAL ASSETS $3,935,588 $3,841,520
========== ==========
PRINCETON ELECTRONIC PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Cont'd.)
Unaudited Audited
Q/E Y/E
8/31/95 5/31/95
CURRENT LIABILITIES ----------- -----------
- --------------------
Long term debt - current portion $ 322,574 $ 519,893
Accrued expenses 492,293 210,219
Accrued interest and real estate taxes 22,339 22,339
Payroll & sales taxes payable 1,230 1,555
Deferred Revenue 68,750 68,750
--------- ---------
Total Current Liabilities $ 907,186 $ 822,756
--------- ---------
Long Term Debt $1,229,522 $1,041,747
Long Term Debt-Note #1 367,901 0
--------- ---------
$1,597,423 $1,041,747
--------- ---------
Stockholders' equity:
Preferred stock, no par value:
2,342,900 shares authorized,
convertible into 1 share of common
1,893,321 issued & outstanding 2,316,119 2,316,119
Common stock, no par value,
15,000,000 shares authorized,
15,792,192 issued & outstanding 9,346,049 9,346,049
Additional paid in capital 5,282,205 5,282,205
Accumulated deficit (13,714,144)(13,501,607)
---------- ----------
3,230,229 3,442,766
Unrealized Income (Loss) on available-
for sale securities (1,454,517) (1,488,917)
Treasury stock (344,733) (344,733)
---------- ----------
Net stockholders' equity $1,430,979 $1,609,116
---------- ----------
TOTAL LIABILITY &
STOCKHOLDERS EQUITY $3,935,588 $3,473,619
=========== ===========
Note #1: Reclassed Notes Long Term Portion
PRINCETON ELECTRONIC PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
3 months 3 months
ended ended
8/31/95 8/31/94
REVENUES
- ------------
Rental 167,665 61,198
Other 65,399 0
Hair Care Div 17,272 17,900
---------- ----------
TOTAL REVENUE $ 250,336 $ 79,098
---------- ---------
COSTS & EXPENSES:
- -----------------
C.O.S.-Hair Care Division 1,442 4,089
Rental Expense-Hair Care Division 6,586 13,049
Building expenses 95,270 82,517
Selling, G & A 274,839 209,187
Selling, G & S-Hair Care Division 74,607 9,313
----------- -----------
TOTAL COSTS & EXPENSES $ 452,744 $ 318,155
----------- ----------
NET (LOSS) FROM OPERATIONS ($ 202,408)($ 239,057)
----------- -----------
Other Income (Expense)
Interest Income 0 4,170
(Interest Expense) (10,124) (31,423)
Other 0 25,822
Broker Dealer Recover 0
Loss Net Real. Sale Sec. 0
----------- -----------
Total Other Income (Expense) ($10,124) ($1,431)
---------- -----------
Net (Loss) Before Adjustment ($ 212,532)($ 240,488)
---------- -----------
Adjustment for Minority
Subsidiary Interest 3,750 4,276
----------- -----------
NET (LOSS) ($ 208,782)($ 236,212)
=========== ===========
NET (LOSS) PER SHARE (0.014) (0.016)
WEIGHTED AVERAGE # OF SHARES
AT 8/31/95 14,981,622
AT 8/31/94 14,748,671
PRINCETON ELECTRONIC PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
3 months 3 months
ended ended
8/31/95 8/31/94
---------- ----------
Cash flow from Operating Activities:
Net Income (Loss) ($ 212,532) ($ 240,488)
----------- -----------
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 17,000 18,750
(Increase) decrease in securities owned (34,700) 491,648
(Increase) decrease in accts. rec. 63,445 (255,996)
(Increase) decrease in deposits 9,359 5,000
(Increase) decrease in ppd exp. (17,571) 0
(Increase) decrease in inventory (37,945) (57,067)
(Increase) decrease in notes rec. adv. inv.(125,408) (95,087)
Increase (decrease) in accrued expenses 289,625 (873,792)
Increase (decrease) in property & equip 10,719
Stock issued for services 0 7,500
Stock issued for investment 0 0
Stock issued for debt reduction 0 0
----------- -----------
Total adjustments 174,524 (759,044)
----------- -----------
Net cash (used in) provided by
operating activities ($ 38,008)($ 999,532)
----------- -----------
Cash flow from financing activities:
(Decrease)increase in notes payable (9,544) 0
Proceeds from issuance of common stock 0 996,841
----------- -----------
Net cash (used in) provided by
financing activities (9,544) 996,841
Net (decrease) increase in cash ($ 47,552)($ 2,691)
Cash beginning of period 49,057 62,077
------------ -----------
Cash end of period $1,505 $59,386
=========== ===========
PRINCETON ELECTRONIC PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
August 31, 1995
(Unaudited)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation SB. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period
ended August 31, 1995 are not necessarily indicative of the
results that may be expected for the year ended May 31, 1996. For
further information refer to the consolidated financial
statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended May 31, 1995.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
THREE MONTHS ENDED AUGUST 31, 1995
Operating Results
During fiscal quarter ended August 31, 1995, the Company had
revenues from its two divisions: Real Estate Division and
Personal Care Division.
The Company's rental revenues increased during the quarter ended
August 31, 1995 by 273% from $61,198 during the first quarter of
fiscal year 1995 to $167,665 in the first quarter of fiscal year
1996 primarily as a result of increased rates per square foot on
leases and substantially increased leasing of available space.
In addition, the Company acquired an additional 20,000 square
foot commercial office building which will further increase
future revenues. since the date of this report the Company has
completed 100% leasing of its headquarters office building, which
should produce total revenues of approximately $470,000 during
the current fiscal year. Also subsequent to the date of this
report a lease on 10,000 square feet of the Company's second
office building was signed and increased revenues will be
reported in subsequent reports. Rental income costs have
increased with the increased occupancy of the headquarters
building and the costs of operations and acquisition of the
second building. These costs increased by 11.5% from $82,517 in
first quarter 1995 to $95,270 for first quarter 1996. Even with
the increased expenses the headquarters office is profitable and
will produce positive cast flow for the current fiscal year. The
second office building is 50% occupied and will produce positive
cash from at its present occupancy. Negotiations are underway
for leases for the balance of the unoccupied space in this
building and completions are anticipated in the current quarter.
No comparison of revenue for the personal care division is being
made. However for this quarter ended August 31, 1995, total
revenues were $17,272. This division has been developing new
packaging and has recently signed contracts which will produce
substantial revenues over the balance of the current fiscal year.
Operating costs have reflected development and promotional
expenses totaling $74,607, which is not indicative of normal
costs associated with this industry. Management expects costs to
normalize as market penetration produces sufficient sales of
product to spread these costs over significant units of product.
Based upon analysis of the progress of the marketing effort
management does not expect significant revenues or income until
the fourth fiscal quarter of this year.
Net loss for the quarter of $208,782 was 8.8% less than the
comparable quarter in 1994. This was due to the reduction in
interest expense, along with the increased revenues from leasing
activity in the Real Estate Division. Although general and
administrative expense was increased 31% to $274,839 from the 1994
results of $209,187, the revenues were sufficient to reduce the
operating loss.
Liquidity and Capital Resources
The Company's current ratio (current assets divided by current
liabilities) decreased from 2.01 to 1. in August 1994 to .59 to
one as the result of use of proceeds from sale of securities to
fund operating losses in the building and personal care divisions.
The Company's current assets decreased from $3,382,351 at August
31, 1994 to $614,980 as of August 31, 1995, primarily as a result
of the sale of the available for sale securities held by the
Company.
The Company expects that increased liquidity will be obtained in
the future from private placement of its shares, refinance of
property and merchandise sales. However, no assurance can be made
that the Company will be successful in completing any of these
objectives.
The Company's current portion of long term debt was reduced due to
the payment by the Company of a mortgage on its Company
headquarters of $210,000 and refinancing of the property to retire
the second mortgage of $187,500. This financing is not expected to
have any short term impact upon the Company's liquidity or
operations.
As a result of payment of the mortgages previously referred to the
interest expense of the Company was reduced by 310% to $10,124.
The Company is continuing to develop strategies and financing to
enable its Personal Care Division to expand its market. The
Company is expecting to increase revenues in its Real Estate
Division through active leasing of its remaining rentable space.
Although no assurance can be given that the Company will
successfully accomplish these goals, management believes that
continued activity will result in completion of these goals.
FORM 10-QSB
PRINCETON ELECTRONIC PRODUCTS, INC.
FOR THE THREE MONTHS ENDED AUGUST 31, 1995
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.
PRINCETON ELECTRONIC PRODUCTS, INC.
DALE E. EYMAN, Chairman, CEO
(Signature)
October 12, 1995
Date
