FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended July 31, 1998
Commission File No. 2-33256
TOROTEL, INC.
(Exact name of small business issuer as
specified in its charter)
MISSOURI 44-0610086
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
13402 S 71 HIGHWAY, GRANDVIEW, MISSOURI 64030
(Address of principal executive offices)
(816) 761-6314
(Issuer's telephone number)
NONE
(Former name, former address and former
fiscal year, if change since last report)
Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months and
(2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of September 10, 1998, there were 2,810,985
shares of Common Stock, $.50 Par Value,
outstanding.
TOROTEL, INC. AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as
of July 31, 1998
Consolidated Statements of Operations
for the three months ended July 31,
1998 and 1997
Consolidated Statements of Cash Flows
for the three months ended July 31,
1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and
Analysis or Plan of Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET (Unaudited)
As of July 31, 1998
ASSETS
Current assets:
Cash $ 9,000
Accounts receivable, net 1,505,000
Inventories (Note 3) 3,224,000
Prepaid expenses and other current
assets 172,000
Asset held for disposal 76,000
4,986,000
Property, plant and equipment, net 1,517,000
Other assets 44,000
$ 6,547,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term revolving credit
line (Note 5) $ 1,994,000
Current maturities of
long-term debt 284,000
Trade accounts payable 904,000
Accrued liabilities 462,000
3,644,000
Long-term debt, less current
maturities 1,530,000
Note and interest payable to
former officer (Note 6) 448,000
Commitments and contingencies
(Notes 6, 10 and 11) 486,000
Stockholders' equity
(Notes 7, 8, 9 and 10):
Common stock, at par value 1,441,000
Capital in excess of par value 8,673,000
Accumulated deficit (9,470,000)
644,000
Less treasury stock, at cost 205,000
439,000
$ 6,547,000
The accompanying notes are an integral part
of these statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended July 31,
1998 1997
Net sales $ 2,633,000 $ 3,377,000
Cost of goods sold 2,362,000 2,451,000
Gross profit 271,000 926,000
Operating expenses:
Engineering 202,000 207,000
Selling, general and
administrative 582,000 604,000
784,000 811,000
Earnings (loss)
from operations (513,000) 115,000
Other expense:
Interest expense 83,000 67,000
Other, net - 70,000
83,000 137,000
Loss before
provision for income
taxes (596,000) (22,000)
Provision for income
taxes (Note 4) - -
Net loss $ (596,000) $ (22,000)
Basic loss per share
(Note 7) $ (.21) $ (.01)
Diluted loss per
share (Note 7) $ (.21) $ (.01)
The accompanying notes are an integral part
of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended July 31,
1998 1997
Cash flows from
operating
activities:
Net loss $ (596,000) $ (22,000)
Adjustments to reconcile net loss to net cash
provided by (used in) operations:
Loss from estimated
government penalty - 70,000
Depreciation and
amortization 89,000 85,000
Increase (decrease)
in cash flows from operations
resulting from changes in:
Accounts
receivable 59,000 239,000
Inventories (88,000) (184,000)
Prepaid
expenses and
other assets (85,000) (64,000)
Trade accounts
payable 209,000 72,000
Accrued
liabilities 20,000 64,000
Net cash provided by
(used in) operating
activities (392,000) 260,000
Cash flows from
investing activities:
Capital expenditures (38,000) (26,000)
Cash flows from
financing activities:
Borrowings against
credit line 948,000 100,000
Payments against
credit line (515,000) (370,000)
Principal payments on
long-term debt (45,000) (21,000)
Payments on capital
lease obligations (6,000) (4,000)
Note and interest
payable to former
officer 10,000 -
Proceeds from
issuance of common
stock 1,000 1,000
Net cash provided by
(used in) financing
activities 393,000 (294,000)
Net decrease
in cash $ (37,000) $ (60,000)
Cash at beginning
of year 46,000 196,000
Cash at end of July$ 9,000 $ 136,000
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest $ 73,000 $ 55,000
Income taxes $ - $ -
The accompanying notes are an integral part
of these statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated
financial statements reflect the normal
recurring adjustments which are, in the opinion
of management, necessary to present fairly the
company's financial position at July 31, 1998,
and the results of operations for the three
months ended July 31, 1998.
The financial statements contained herein
should be read in conjunction with the
company's financial statements and related
notes filed on Form 10-KSB for the year ended
April 30, 1998.
Note 2 - Realization of Assets
The accompanying consolidated financial
statements have been prepared in conformity
with generally accepted accounting principles,
which contemplate continuation of the company
as a going concern. However, the company has
sustained substantial losses in the first
quarter of fiscal 1999, and in fiscal years
1998 and 1997. In addition, in the first
quarter of fiscal 1999 and for fiscal year
1998, the company has used, rather than
provided, cash in its operations. The
company's line of credit with PNBT expires
December 31, 1998 (see Note 5 of Notes to
Consolidated Financial Statements). If the
bank does not renew the credit line, the entire
outstanding balance would become due and
payable. Although management believes the bank
has an interest in continuing as the company's
primary lender, the renewal of the credit line
will be subject to, among other things,
satisfactory review of the company's operating
plans, cash needs, available collateral, and
status of the possible acquisition (see Note 10
of Notes to Consolidated Financial Statements).
In view of the matters described in the
preceding paragraph, recoverability of a major
portion of the recorded asset amounts shown in
the accompanying consolidated balance sheet is
dependent upon continued operations of the
company, which in turn is dependent upon the
company's ability to meet its financing
requirements on a continuing basis, to maintain
present financing, and to succeed in its future
operations. The consolidated financial
statements do not include any adjustment
relating to the recoverability and
classification of recorded asset amounts or
amounts and classification of liabilities that
might be necessary should the company be unable
to continue in existence.
Note 3 - Inventories
The components of inventories are
summarized as follows:
Raw materials $ 1,810,000
Work in process 1,004,000
Finished goods 410,000
$ 3,224,000
Note 4 - Income Taxes
The company has net operating loss and
credit carryforwards available as benefits to
reduce future income taxes, subject to
applicable limitations. These tax credit and
operating loss carryforwards expire in various
amounts in the years 1999 through 2013.
The difference between the financial and
tax bases of assets and liabilities is
determined annually. Deferred income taxes and
liabilities are computed for those differences
that have future tax consequences using the
currently enacted tax laws and rates that apply
to the periods in which they are expected to
effect taxable income. Valuation allowances
are established, if necessary, to reduce the
deferred tax asset to the amount that will,
more likely than not, be realized. Income tax
expense is the current tax payable or
refundable for the period plus or minus the net
change in the deferred tax assets or
liabilities.
The following table summarizes the
components of the net deferred tax asset:
Net operating loss
carryforwards $ 2,459,000
Inventory valuation reserve 229,000
Tax credit carryforwards 406,000
Property, plant and equipment 106,000
Other 52,000
3,252,000
Less valuation allowance 3,252,000
$ -
Note 5 - Short-term Revolving Credit Line
The company has renewed its revolving
credit agreement with Phillipsburg National
Bank & Trust Company (PNBT) through December
31, 1998. At the present time, the agreement
provides a $2,500,000 revolving credit line;
however, this amount will be reduced to
approximately $1.3 million upon closing of the
product line sale discussed in Note 11 of Notes
to Consolidated Financial Statements. The
company is negotiating with the bank to
increase the maximum limit to $1.7 million.
Advances under the credit line are limited
to the sum of 75% of eligible billed
receivables and 50% of inventories, net of
reserves. The revolving credit line is
collateralized by trade accounts receivable,
inventories, and a third lien mortgage on OPT's
facility. Under the terms of the agreement,
the outstanding balance of the revolving line
bears interest at 1/2% over the bank's prime
lending rate. As of July 31, 1998, the company
had utilized $1,994,000 of the revolving credit
line and the effective borrowing rate was 9%.
The company is required to comply with certain
covenants including restrictions on the payment
of cash dividends. As of July 31, 1998, the
company was in violation of three financial
covenants under the terms of the previous
credit agreement with PNBT; however, the bank
previously had waived compliance with the
subject provisions through August 31, 1998,
which was the expiration date of the previous
credit line.
Note 6 - Contingency for Estimated Penalty
On May 6, 1997, Torotel Products, Inc. was
accepted into the Voluntary Disclosure Program
of theUnited States Department of Defense,
resulting from its failure to perform some
required "thermal shock" testing as frequently
as required, and inaccurately certifying that
all required testing had been performed. As a
result of the company's investigation into the
thermal shock deficiencies, which was first
reported in November 1996, the company recorded
an estimated charge of $416,000 against
earnings in the fourth quarter of its fiscal
year ended April 30, 1997. Because the
investigation was ongoing, the company
subsequently determined that there also were
some deficiencies in performing some required
electrical testing as frequently as required.
As a result, the company recorded an additional
estimated charge of $70,000 against earnings in
the first quarter of its fiscal year ended
April 30, 1998. The company does not
anticipate incurring any additional major
charges related to the investigation; however,
the aggregate amount of the estimated penalty
is still subject to fluctuation as further
evidence is investigated.
At this time, the company is not certain
when payment of the damage amount will be
required; however, the company does not
anticipate making any payments during the next
twelve months. As a result, the entire
$486,000 has been classified as a long-term
liability in the accompanying consolidated
balance sheet.
The company believes that certain of its
former officers may have been responsible for
the misconduct related to the test failures,
and will evaluate ways of recovering the
damages once the government completes its
investigation. In the meantime, the company
has suspended all principal and interest
payments due under a note payable to a former
officer, and does not anticipate making any
further payments during the next twelve months.
As a result, as of July 31, 1998, the aggregate
amount due of $448,000, which consists of the
outstanding principal of $384,000 plus the
accrued interest of $64,000, has been
classified as a long-term liability in the
accompanying consolidated balance sheet.
The legal fees associated with the DOD
investigation have amounted to $1,000 during
the current fiscal year, and $272,000 in
aggregate since the investigation started in
the third quarter of the fiscal year ended
April 30, 1997.
Note 7 - Earnings Per Share
In February 1997, the FASB issued
Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings per Share, which
replaces the presentation of primary earnings
per share (EPS) with a presentation of basic
EPS; requires dual presentation of basic and
diluted EPS on the face of the statement of
earnings regardless of whether basic and
diluted EPS are the same; and requires a
reconciliation of the numerator and denominator
used in computing basic and diluted EPS. Basic
EPS excludes dilution and is computed by
dividing earnings available to common
stockholders by the weighted average number of
common shares outstanding for the period.
Diluted EPS is computed similarly to fully
diluted EPS pursuant to APB Opinion 15.
Diluted EPS reflects the potential dilution
that could occur if securities or other
contracts to issue common stock were exercised
or converted into common stock or resulted in
the issuance of common stock that then shared
in the earnings of the entity. The statement
became effective for financial statements
issued for periods ending after December 15,
1997, and requires restatement of all prior-
period EPS data presented.
Pursuant to the new statement, the basic
and diluted loss per common share were computed
as follows:
1998 1997
Net loss $ (596,000) $ (22,000)
Weighted average
common shares
outstanding 2,810,985 2,808,268
Incremental shares - -
Basic loss
per share $ (.21) $ (.01)
Diluted loss
per share $ (.21) $ (.01)
No incremental shares are included in the EPS
calculations due to the net loss in each of the
quarterly periods.
Note 8 - Employee Stock Options
Employee stock options are accounted for
under APB Opinion 25, Accounting for Stock
Issued to Employees, and related
interpretations. The exercise price of each
option equals the market price of the company's
common stock on the date of grant.
Accordingly, no compensation cost has been
recognized. The company chose not to adopt
Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation.
The fair value of the options under SFAS No.
123 is approximately $70,000 which is not
deemed significant to earnings.
Stock option transactions under the 1994
Incentive Compensation Plan for each period are
summarized as follows:
1998 1997
Weighted Weighted
Shares Average Shares Average
Under Under
Exercise Exercise
Option Price Option Price
Outstanding
at beginning
of year 150,000 $1.00 150,000 $1.00
Granted - - - -
Exercised - - - -
Forfeited - - - -
Outstanding
at end of
July 150,000 $1.00 150,000 $1.00
Options
exercisable
at end
of July - - - -
Weighted
average
fair value
of options
granted
during the
year - - - -
The following information applies to options
outstanding at July 31, 1998:
Number outstanding 150,000
Range of exercise prices $1.00
Weighted average exercise price $1.00
Weighted average remaining contractual
life 7.4 years
Note 9 - Stock Warrants
Pursuant to a settlement that ended a
class action alleging racial discrimination in
hiring by Torotel Products, Inc., the company
agreed to issue a warrant certificate to the
Torotel Settlement Fund to purchase 100,000
shares of Torotel, Inc. common stock at $.75
per share. The warrant is 100% vested upon
issuance and cannot be exercised until the
market price of the company's common stock
reaches $2.00 per share. The warrant expires
on May 4, 2003.
The warrant is deemed non-compensatory under
Statement of Financial Accounting StandardsNo.
123, Accounting for Stock-Based Compensation.
Stock warrant transactions for each period are
summarized as follows:
1998 1997
Weighted Weighted
Shares Average Shares Average
Under Under
Exercise Exercise
Option Price Option Price
Outstanding
at beginning
of year - - - -
Granted 100,000 $ .75 - -
Exercised - - - -
Forfeited - - - -
Outstanding
at end of
July 100,000 $ .75 - -
Warrants
exercisable
at end of
July - - - -
Weighted
average
fair value
of warrants
granted
during the
year - - - -
The following information applies to warrants
outstanding at July 31, 1998:
Number outstanding 100,000
Range of exercise prices $ .75
Weighted average exercise price $ .75
Weighted average remaining
contractual life 4.75 years
Note 10 - Acquisition
On July 24, 1998, the company entered into
a letter of intent for a possible business
combination with Caloyeras, Inc., d/b/a
Electronika, Inc. (which also will include the
business and assets of its affiliate,
Magnetika/East). This manufacturer of magnetic
components had net sales of $1.8 million, and
normalized and adjusted pretax profits of
$575,000 for its last fiscal year. These are
unaudited results provided by Caloyeras, Inc.
In connection with this business combination,
Torotel, Inc. would exchange 1.8 million shares
of its common stock, and $2.5 million of a new
class of preferred stock (5 percent cumulative,
non-participating), for 100 percent of the
outstanding securities of Caloyeras, Inc. In
addition, the founder's family shareholders of
Torotel, Inc. would form a voting trust or
similar arrangement, pursuant to whichPeter B.
Caloyeras would be allowed to vote 525,165
shares of common stock of Torotel, Inc. owned
by the Sizemore family. As a result of these
transactions, the Caloyeras family would
acquire more than 50 percent of the voting
control of Torotel, Inc. This transaction is
subject to, among other things, due diligence,
the negotiation and execution of definitive
agreements, and the approval of Torotel, Inc.'s
shareholders. There can be no assurance that
the parties will consummate the transaction
contemplated by the letter of intent.
Note 11 - Product Line Sale
On August 13, 1998, the company entered into a
definitive agreement with Pico Electronics,
Inc. of Pelham, New York, which will purchase
an ultra-miniature transformer and inductor
product line from Torotel's wholly-owned
subsidiary, OPT Industries, Inc., for a cash
price of $1.25 million. The closing on the
transaction is scheduled for September 18,
1998.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The discussion and analysis of the results
of operations includes the operations of
Torotel, Inc., and its subsidiaries, Torotel
Products, Inc. and OPT Industries, Inc.
THREE MONTHS ENDED JULY 31, 1998 VERSUS THREE
MONTHS ENDED JULY 31, 1997
Net sales decreased 22%. The net sales of
Torotel Products increased slightly from
$1,576,000 to $1,592,000. OPT's net sales
decreased 42% from $1,801,000 to $1,041,000 due
primarily to lower sales of power supplies to a
major customer. No significant orders are
expected from this customer at this time. OPT
did receive over $1.0 million in orders for its
new power supplies products during the quarter
ended July 31, 1998, which will contribute to
higher sales in the second half of fiscal 1999.
Gross profit as a percentage of net sales
decreased 17%. The gross profit percentage of
Torotel Products decreased 13% due primarily to
labor inefficiencies. The gross profit
percentage of OPT decreased 27% due to labor
inefficiencies and lower sales volume without a
comparable decrease in fixed production costs.
Engineering expenses decreased 2%. The
engineering expenses of Torotel Products
decreased 12% from $73,000 to $64,000 due
primarily to a $4,000 decrease in equipment
rental costs, a $2,000 decrease in payroll
costs, a $2,000 decrease in training costs, and
a $1,000 decrease in travel costs. The
engineering expenses of OPT increased 3% from
$134,000 to $138,000 due primarily to $2,000
increase in recruiting costs and a $2,000
increase in costs for equipment repairs and
maintenance.
Selling, general and administrative (SG&A)
expenses decreased 4%. The SG&A expenses of
Torotel, Inc. decreased 17% from $53,000 to
$44,000 due primarily to a $5,000 decrease in
directors fees and a $4,000 decrease in
professional fees. The SG&A expenses of
Torotel Products decreased 4% from $299,000 to
$287,000 due primarily to a $33,000 decrease in
professional fees, a $4,000 decrease in sales
commissions. These decreases were offset
partially by a $12,000 increase in payroll
costs, a $6,000 increase in hazardous waste
disposal costs, a $5,000 increase in utilities
costs and a $2,000 increase in costs for
equipment repairs and maintenance. The SG&A
expenses of OPT decreased slightly from
$252,000 to $251,000.
Interest expense increased 24%. The
interest expense of Torotel, Inc. remained
unchanged at $10,000. The interest expense of
Torotel Products increased 45% from $29,000 to
$42,000 due to a higher aggregate borrowing
level. The interest expense of OPT increased
11% from $28,000 to $31,000 due to a higher
aggregate borrowing level.
Sundry non-operating expense decreased due
to a $70,000 charge in the quarter ended July
31, 1997, for an estimated penalty as discussed
in Note 6 of Notes to Consolidated Financial
Statements.
For the reasons discussed above, the
consolidated pretax loss increased from $22,000
to $596,000. The pretax loss of Torotel, Inc.
decreased from $63,000 to $54,000. The pretax
loss of Torotel Products increased from a
profit of $49,000 to a loss of $75,000. The
pretax loss of OPT increased from $8,000 to
$467,000.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the company has relied on
funds generated internally and bank borrowings
to meet its normal operating requirements and
to service bank indebtedness. For the fiscal
year ended April 30, 1998, the company incurred
a pretax loss of $1,295,000. For the three
months ended July 31, 1998, the company
incurred an additional loss of $596,000.
Management does not anticipate any substantial
increase in the present rate of sales during
the next few months. As a result, further
operating losses are likely; however, these
losses will be offset by an anticipated gain
from the product line sale discussed in Note 11
of Notes to Consolidated Financial Statements.
As of July 31, 1998, the company was in
violation of three financial covenants under
the terms of the previous credit agreement with
PNBT (see Note 5 of Notes to Consolidated
Financial Statements); however, the bank
previously had waived compliance with the
subject provisions through August 31, 1998,
which was the expiration date of the revolving
credit line. PNBT has renewed the company's
line of credit through December 31, 1998. At
the present time, the agreement provides a line
of credit of $2,500,000; however, this amount
will be reduced to approximately $1.3 million
upon closing of the product line sale
referenced above. The company is negotiating
with the bank to increase the maximum limit to
$1.7 million. In addition, PNBT will review
the entire credit arrangement upon signing of a
definitive agreement with Caloyeras, Inc. (see
Note 10 of Notes to Consolidated Financial
Statements). While the bank has expressed a
willingness to continue as the company's
primary lender, the renewal of the credit line
will be subject to, among other things,
satisfactory review of the company's operating
plans, cash needs, available collateral, and
status of the possible acquisition of
Caloyeras, Inc. If the bank decides not to
renew the credit line, it could affect the
company's ability to continue as a going
concern (see Note 2 of Notes to Consolidated
Financial Statements). While the company may
be able to find an alternate source for
financing, most likely it would be short-term
in nature, carry substantially higher costs and
lending rates, and be much more restrictive for
liquidity purposes.
During the three months ended July 31,
1998, the company's operating activities used
$392,000 in cash flow. Corporate related
matters used $57,000. The operations of
Torotel Products provided $312,000 in cash flow
due primarily to a lower level of receivables
and inventories, and a higher level of
payables. OPT's operations used $647,000 in
cash flow due primarily to pretax losses, and a
higher level of receivables and inventories.
Investing activities used $38,000 in cash
flow for capital expenditures for production
equipment and building improvements. The
company expects investments of approximately
$125,000 for capital expenditures in fiscal
1999.
Financing activities provided $393,000 in
cash flow due primarily to increased borrowings
against the revolving credit line. At July 31,
1998, the company had used $1,994,000 of its
revolving credit line and had $506,000
available for future cash requirements, based
on the lender's borrowing base formula.
The company believes that inflation will
have only a minimal effect on future operations
since such effects will be offset by sales
price increases which are not expected to have
a significant effect upon demand.
Year 2000 Readiness
Management is presently assessing both
operating companies for their Year 2000
readiness. Extensive testing has been
performed on the main operating system and its
software applications (which serves both
operating companies), and it has been
determined that both are Year 2000 compliant.
Both operations now are in the process of
polling significant suppliers and customers to
determine the extent to which either operation
is vulnerable to those third parties' failure
to remediate their own Year 2000 issues. In
addition, various equipment is being tested to
verify its Year 2000 functionality. The cost
of these efforts has been and should continue
to be minimal.
The company believes all necessary steps
are being taken to assure a smooth transition
to the Year 2000. However, there is no
guarantee that the systems of major suppliers
and customers will be timely converted and
would not have a material adverse effect on the
company.
Other
Except for historical information
contained herein, certain of the matters
discussed above are forward-looking statements
within the meaning of the Private Securities
Litigation Reform Act of 1995, and are subject
to the safe harbor created by that Act. These
statements are based on assumptions about a
number of important factors and involve risks
and uncertainties that could cause actual
results to be different from what is stated
here. These risk factors include: decreased
demand for products, delays in developing new
products, expected orders that do not occur,
loss of key customers, and the DOD calling for
payment of the accrued penalty and assessing
additional fees, the impact of competition and
price erosion as well as supply and
manufacturing constraints, and other risks and
uncertainties.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There is one legal proceeding involving
the company. On May 6, 1997, Torotel Products,
Inc. was accepted into the Voluntary Disclosure
Program by the Inspector General of the United
States Department of Defense, resulting from
its failure to perform some required testing as
frequently as required, and inaccurately
certifying that all required testing had been
performed. As a result of the company's
investigation into the testing deficiencies,
the company has recorded an estimated charge of
$486,000 against earnings. The estimated
penalty is still subject to fluctuation as
further evidence is investigated. The company
believes that certain of its former officers
may have been responsible for the misconduct
related to the test failures, and will evaluate
ways of recovering the damages once the
government completes its investigation. In the
meantime, the company has suspended all
payments under a note payable to a former
officer.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 27 -- Financial Data
Schedule (electronic filings
only)
b) Reports on Form 8-K -- There was one
report filed on Form 8-K during the
three months ended July 31, 1998. The
report was dated July 29, 1998, and
included information on the possible
merger with Caloyeras, Inc. d/b/a
Electronika, Inc. (which will also
include the business and assets of its
affiliate, Magnetika/East), as required
by Item 5 of Form 8-K.
SIGNATURES
In accordance with the requirements of the
Securities Exchange Act of 1934, the Registrant
caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Torotel, Inc.
(Registrant)
Date: September 11, 1998 /s/ H. James Serrone
H. James Serrone
Vice President of
Finance and Chief
Financial Officer
