x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Minnesota
|
41-1347235
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
Yes
|
x
|
No
|
o
|
Yes
|
o
|
No
|
x
|
Class:
|
Outstanding
at August 5, 2005
|
Common
stock, par value $.01
|
11,872,331
|
PART
I
|
3
|
3
|
|
3
|
|
4
|
|
5
|
|
6
|
|
8
|
|
18
|
|
19
|
|
PART
II
|
19
|
19
|
|
19
|
|
19
|
June
30,
|
March
31,
|
||||||
2005
|
2005
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
10,051,889
|
$
|
10,813,492
|
|||
Accounts
receivable, net of allowance for uncollectible accounts
of $67,601
at June 30, 2005 and $57,107 at March 31, 2005
|
1,449,171
|
1,446,248
|
|||||
Inventories
|
1,381,630
|
1,270,653
|
|||||
Prepaid
expenses
|
220,135
|
264,372
|
|||||
Bond
reserve funds
|
42,828
|
131,548
|
|||||
Total
current assets
|
13,145,653
|
13,926,313
|
|||||
Property,
plant and equipment, net
|
3,823,244
|
3,946,998
|
|||||
Other
assets:
|
|||||||
Bond
reserve funds
|
336,211
|
337,091
|
|||||
Goodwill
|
3,422,511
|
3,422,511
|
|||||
Other
|
404,809
|
441,101
|
|||||
4,163,531
|
4,200,703
|
||||||
Total
assets
|
$
|
21,132,428
|
$
|
22,074,014
|
|||
Liabilities
and shareholders’ equity
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of long-term debt
|
$
|
1,360,237
|
$
|
1,471,036
|
|||
Accounts
payable
|
1,019,053
|
814,005
|
|||||
Accrued
compensation
|
561,568
|
568,950
|
|||||
Accrued
expenses
|
153,899
|
190,062
|
|||||
Total
current liabilities
|
3,094,757
|
3,044,053
|
|||||
Long-term
debt
|
1,975
|
107,800
|
|||||
Shareholders’
equity:
|
|||||||
Undesignated
shares, 4,999,500 authorized shares; no shares issued and
outstanding
|
-
|
-
|
|||||
Preferred
stock, $.01 par value; 500 authorized shares; no shares issued and
outstanding
|
-
|
-
|
|||||
Common
stock, $.01 par value; 50,000,000 authorized shares; 11,872,331
shares issued and outstanding at June 30, 2005 and 2004
|
118,723
|
118,723
|
|||||
Additional
paid-in capital
|
51,964,625
|
51,960,084
|
|||||
Accumulated
deficit
|
(34,047,652
|
)
|
(33,156,646
|
)
|
|||
Total
shareholders’ equity
|
18,035,696
|
18,922,161
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
21,132,428
|
$
|
22,074,014
|
Three
Months Ended
|
|||||||
June
30,
|
|||||||
2005
|
2004
|
||||||
Revenues
|
$
|
3,512,563
|
$
|
3,687,718
|
|||
Cost
of sales
|
2,787,453
|
3,086,843
|
|||||
Gross
profit
|
725,110
|
600,875
|
|||||
Operating
expenses
|
|||||||
Research
and development
|
323,598
|
191,208
|
|||||
Selling,
general and administrative
|
1,470,408
|
1,350,907
|
|||||
1,794,006
|
1,542,115
|
||||||
Loss
from operations
|
(1,068,896
|
)
|
(941,240
|
)
|
|||
Other
income
|
201,722
|
265,606
|
|||||
Other
expense
|
(22,882
|
)
|
(25,252
|
)
|
|||
178,840
|
240,354
|
||||||
Loss
before income taxes
|
(890,056
|
)
|
(700,886
|
)
|
|||
Income
taxes
|
950
|
1,950
|
|||||
Net
loss
|
$
|
(891,006
|
)
|
$
|
(702,836
|
)
|
|
Net
loss per share:
|
|||||||
Basic
and diluted
|
($0.08
|
)
|
($0.06
|
)
|
|||
Weighted
average shares outstanding:
|
|||||||
Basic
and diluted
|
11,872,331
|
11,872,331
|
Three
Months Ended
|
|||||||
June
30,
|
|||||||
2005
|
2004
|
||||||
Operating
activities
|
|||||||
Net
loss
|
$
|
(891,006
|
)
|
$
|
(702,836
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities, net
of
acquisition:
|
|||||||
Depreciation
and amortization
|
269,847
|
239,481
|
|||||
Gain
on sale of assets
|
(109,935
|
)
|
(208,314
|
)
|
|||
Compensation
expense
|
4,541
|
(13,462
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable, net
|
(2,923
|
)
|
137,775
|
||||
Inventories
|
(110,977
|
)
|
(63,878
|
)
|
|||
Prepaid
expenses and other
|
44,130
|
45,617
|
|||||
Accounts
payable and accrued expenses
|
161,503
|
216,127
|
|||||
Net
cash used in operating activities
|
(634,820
|
)
|
(349,490
|
)
|
|||
Investing
activities
|
|||||||
Purchases
of property and equipment
|
(121,259
|
)
|
(261,611
|
)
|
|||
Proceeds
from sale of assets
|
1,500
|
220,000
|
|||||
Net
cash used in investing activities
|
(119,759
|
)
|
(41,611
|
)
|
|||
Financing
activities
|
|||||||
Repayment
of long-term debt
|
(96,624
|
)
|
(199,792
|
)
|
|||
Decrease
in bond reserve funds
|
89,600
|
89,023
|
|||||
Net
cash used in financing activities
|
(7,024
|
)
|
(110,769
|
)
|
|||
Decrease
in cash and cash equivalents
|
(761,603
|
)
|
(501,870
|
)
|
|||
Cash
and cash equivalents at beginning of period
|
10,813,492
|
13,544,910
|
|||||
Cash
and cash equivalents at end of period
|
$
|
10,051,889
|
$
|
13,043,040
|
|||
Noncash
investing and financing activities
|
|||||||
Capital
expenditure included in accounts payable
|
$
|
-
|
$
|
225,000
|
|||
Net
assets held for sale
|
-
|
44,880
|
Three
Months Ended
|
|||||||
June
30
|
|||||||
2005
|
2004
|
||||||
Numerator
for basic and diluted net loss
|
$
|
(891,006
|
)
|
$
|
(702,836
|
)
|
|
Denominator
for basic and diluted net loss per share - weighted average
shares outstanding
|
11,872,331
|
11,872,331
|
|||||
Basic
and diluted net loss per share
|
($0.08
|
)
|
($0.06
|
)
|
Optronics
|
Cables
& Networks
|
Eliminations
|
Consolidated
|
||||||||||
Three
months ended June 30, 2005
|
|||||||||||||
External
sales
|
$
|
103
|
$
|
3,509
|
$
|
(99
|
)
|
$
|
3,513
|
||||
Gross
profit
|
(186
|
)
|
912
|
(1
|
)
|
725
|
|||||||
Operating
loss
|
(1,001
|
)
|
(68
|
)
|
-
|
(1,069
|
)
|
||||||
Depreciation
and amortization
|
210
|
60
|
-
|
270
|
|||||||||
Capital
expenditures
|
87
|
34
|
-
|
121
|
|||||||||
Assets
|
21,149
|
7,341
|
(7,358
|
)
|
21,132
|
||||||||
Three
months ended June 30, 2004
|
|||||||||||||
External
sales
|
$
|
143
|
$
|
3,672
|
(127
|
)
|
$
|
3,688
|
|||||
Goss
profit
|
(429
|
)
|
1,030
|
-
|
601
|
||||||||
Operating
income (loss)
|
(1,036
|
)
|
95
|
-
|
(941
|
)
|
|||||||
Depreciation
and amortization
|
185
|
54
|
-
|
239
|
|||||||||
Capital
expenditures
|
234
|
28
|
-
|
262
|
|||||||||
Assets
|
25,032
|
7,529
|
(7,402
|
)
|
25,159
|
Three
Months Ended
|
|||||||
June
30
|
|||||||
2005
|
2004
|
||||||
Net
loss to common shareholders - as reported
|
$
|
(891,006
|
)
|
$
|
(702,836
|
)
|
|
Less:
Total stock-based employee compensation expense determined under
fair
value based method for all awards, net of related tax
effects
|
(31,565
|
)
|
(48,342
|
)
|
|||
Net
loss - pro forma
|
$
|
(922,571
|
)
|
$
|
(751,178
|
)
|
|
Basic
and diluted net loss per common share - as reported
|
($0.08
|
)
|
($0.06
|
)
|
|||
Basic
and diluted net loss per common share - pro forma
|
($0.08
|
)
|
($0.06
|
)
|
Total
|
Less
than
1
Year
|
1-3
years
|
4-5
years
|
After
5
years
|
||||||||||||
Long-term
debt
|
$
|
1,364
|
$
|
1,362
|
$
|
2
|
$
|
0
|
$
|
0
|
||||||
Leases
|
1,223
|
484
|
507
|
207
|
25
|
|||||||||||
Total
Contractual Cash
|
||||||||||||||||
Obligations
|
$
|
2,587
|
$
|
1,846
|
$
|
509
|
$
|
207
|
$
|
25
|
·
|
Accounting
for income taxes; and
|
·
|
Valuation
and evaluating impairment of long-lived assets and
goodwill
|
·
|
Challenges
associated with integrating the operations, personnel, etc., of an
acquired company;
|
·
|
Potentially
dilutive issuances of equity
securities;
|
·
|
Reduced
cash balances and or increased debt and debt service
costs;
|
·
|
Large
one-time write-offs of intangible
assets;
|
·
|
Risks
associated with geographic or business markets different than those
we are
familiar with; and
|
·
|
Diversion
of management attention from current
responsibilities.
|
·
|
Difficulties
in achieving adequate yields from new manufacturing
lines,
|
·
|
Difficulty
maintaining the precise manufacturing processes required by our products
while increasing capacity,
|
·
|
The
inability to timely procure and install the necessary equipment,
and
|
·
|
Lack
of availability of qualified manufacturing
personnel.
|
·
|
Seek
lower cost suppliers of raw materials or
components.
|
·
|
Work
to further automate our assembly
process.
|
·
|
Develop
value-added components based on integrated
optics.
|
·
|
Seek
offshore sources for manufacturing and assembly
services.
|
·
|
local
economic and market conditions;
|
·
|
political
and economic instability;
|
·
|
fluctuations
in foreign currency exchange rates;
|
·
|
tariffs
and other barriers and
restrictions;
|
·
|
geopolitical
and environmental risks; and
|
·
|
changes
in diplomatic or trade relationships and natural
disasters.
|
·
|
delayed
market acceptance of our products;
|
·
|
delays
in product shipments;
|
·
|
unexpected
expenses and diversion of resources to replace defective products
or
identify the source of errors and correct
them;
|
·
|
damage
to our reputation and our customer
relationships;
|
·
|
delayed
recognition of sales or reduced sales;
and
|
·
|
product
liability claims or other claims for damages that may be caused by
any
product defects or performance
failures.
|
(a)
|
Evaluation
of disclosure controls and procedures.
The Company’s chief executive officer and chief financial officer have
concluded that as of the end of the fiscal period covered by this
report
the Company’s disclosure controls and procedures (as defined in Exchange
Act Rule 13a-14(c)) were sufficiently effective to ensure that the
information required to be disclosed by the Company in the report
was
gathered, analyzed and disclosed with adequate timeliness, accuracy
and
completeness.
|
(b)
|
Changes
in internal controls.
There were no changes in the Company’s internal controls over financial
reporting during the fiscal period covered by this report that materially
affected, or are likely to materially affect, the Company’s control over
financial reporting.
|
(a) |
Exhibits.
|
(b) |
Reports
on Form 8-K.
|
8/12/05
|
/s/
Anil K. Jain
|
|
Date
|
Anil
K. Jain
|
|
President,
Chief
Executive Officer and Chief
Financial
Officer (Principal
Executive
and Principal Financial
Officer)
|
||
8/12/05
|
/s/
Daniel Herzog
|
|
Date
|
Comptroller
|
|
(Principal
Accounting Officer)
|