-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QQxeo35JaWO5Mvvq5kyNPmGTE1LH+igzhsxe4KJZ/fYSg6hFrNDdbc8Hg9v1P5+m LZTKJPJRl6NhAcIohGZffQ== 0001042910-99-000109.txt : 19990215 0001042910-99-000109.hdr.sgml : 19990215 ACCESSION NUMBER: 0001042910-99-000109 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAIR ELECTRONICS INC CENTRAL INDEX KEY: 0000095366 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 590780772 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04334 FILM NUMBER: 99535358 BUSINESS ADDRESS: STREET 1: 3101 SW THIRD AVE STREET 2: EXECUTIVE OFFICES CITY: FORT LAUDERDALE STATE: FL ZIP: 33315 BUSINESS PHONE: 3055251505 MAIL ADDRESS: STREET 1: 3101 SW THIRD AVENUE CITY: FT LAUDERDALE STATE: FL ZIP: 33315 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED DECEMBER 31, 1998 COMMISSION FILE NUMBER 1-4334 ***************** ************* SUNAIR ELECTRONICS, INC. *************************************************************************** (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FLORIDA 59-0780772 *************************************** ************************ (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 3101 SW THIRD AVE., FT. LAUDERDALE, FLA. 33315 **************************************** ************** (ADDRESS OR PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (954) 525-1505 ************** NONE ************************************************************************** (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) 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 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 THE REPORT. CLASS OUTSTANDING AT ***************************** **************************** COMMON STOCK, $0.10 PAR VALUE 12/31/98 - 3,743,070 SHARES - 1 - SUNAIR ELECTRONICS, INC. AND SUBSIDIARY INDEX *****
PAGE NO. ******** PART I. FINANCIAL INFORMATION: CONSOLIDATED CONDENSED BALANCE SHEETS - - DECEMBER 31, 1998 AND SEPTEMBER 30, 1998 3 CONSOLIDATED CONDENSED STATEMENTS OF INCOME - - THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 4 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6-8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED STATEMENTS 9-10 PART II. OTHER INFORMATION 11
- 2 - PART I. FINANCIAL INFORMATION SUNAIR ELECTRONICS, INC. AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
ASSETS 12/31/98 9/30/98 - ------ ----------------- ----------------- CURRENT ASSETS: - -------------- CASH AND CASH EQUIVALENTS $ 1,066,283 $ 1,463,726 ACCOUNTS AND NOTES RECEIVABLE 505,413 474,065 INVENTORIES 6,905,962 6,807,635 PREPAID EXPENSES AND OTHER CURRENT ASSETS 53,773 40,920 ----------------- ----------------- TOTAL CURRENT ASSETS 8,531,431 8,786,346 ----------------- ----------------- INVESTMENT IN MARKETABLE SECURITIES 3,124,585 3,131,753 - ----------------------------------- PROPERTY, PLANT AND EQUIPMENT-NET 1,045,607 1,025,096 - --------------------------------- TOTAL ASSETS $12,701,623 $12,943,195 ============ ================ ================ LIABILITIES & SHAREHOLDERS' EQUITY - ---------------------------------- CURRENT LIABILITIES: - ------------------- ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 112,274 $ 231,934 CURRENT PORTION OF CAPITALIZED LEASE 849 7,495 CURRENT PORTION OF INCOME TAXES PAYABLE 0 33,614 ----------------- ----------------- TOTAL CURRENT LIABILITIES 113,123 273,043 ----------------- ----------------- LONG-TERM LIABILITIES: - --------------------- LONG-TERM PORTION OF INCOME TAXES PAYABLE 737,000 737,000 ----------------- ----------------- TOTAL LONG-TERM LIABILITIES 737,000 737,000 ----------------- ----------------- STOCKHOLDERS' EQUITY - -------------------- PREFERRED STOCK, NO PAR VALUE, 500,000 SHARES AUTHORIZED, NO SHARES ISSUED 0 0 COMMON STOCK, $.10 PAR VALUE, 6,000,000 SHARES AUTHORIZED, 3,743,070 AND 3,756,270 SHARES ISSUED AND OUTSTANDING AT 12/31/98 AND 9/30/98 RESPECTIVELY 374,307 375,627 ADDITIONAL PAID-IN-CAPITAL 2,581,480 2,606,899 RETAINED EARNINGS 8,895,713 8,950,626 ----------------- ----------------- 11,851,500 11,933,152 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $12,701,623 $12,943,195 ======================================== ================ ================
- 3 - CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED ------------------ 12/31/98 12/31/97 ----------------- ------------------ SALES $ 606,507 $1,148,170 COST OF SALES 450,126 827,296 ----------------- ------------------ GROSS PROFIT 156,381 320,874 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 302,243 287,480 ----------------- ------------------ OPERATING (LOSS) ( 145,862) 33,394 OTHER INCOME: INTEREST INCOME 57,089 63,418 INTEREST EXPENSE ( 100) ( 380) OTHER, NET 2,360 1,405 ----------------- ------------------ INCOME BEFORE PROVISION FOR INCOME TAXES ( 86,513) 97,837 (PROVISION) BENEFIT FOR INCOME TAXES 31,600 ( 31,400) ----------------- ------------------ NET INCOME (LOSS) $( 54,913) $ 66,437 ================ ================= WEIGHTED AVERAGE NUMBER OF COMMON 3,747,448 3,929,000 SHARES OUTSTANDING NET INCOME PER SHARE (BASIC AND DILUTED) $( 0.01) $ 0.02 ================ =================
- 4 - CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED ------------------ 12/31/98 12/31/97 ----------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $( 54,913) $ 66,437 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES DEPRECIATION AND AMORTIZATION 18,152 23,219 CHANGES IN OPERATING ACTIVITIES: (INCR) ACCOUNTS RECEIVABLE ( 31,348) ( 45,480) (INCR) DECR IN INVENTORY ( 98,327) 326,512 (INCR) IN OTHER ASSETS ( 12,853) ( 12,613) (DECR) IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES ( 114,506) ( 179,815) (DECR) INCR IN ACCRUED INCOME TAX ( 31,600) 1,400 ----------------- ------------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES ( 325,395) 179,660 ----------------- ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: PURCHASE OF PROPERTY, PLANT & EQUIPMENT ( 38,663) ( 62,313) SALES OF INVESTMENTS - NET 0 38,100 ----------------- ------------------ NET CASH USED BY INVESTING ACTIVITIES ( 38,663) ( 24,213) ----------------- ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: PURCHASE OF OUTSTANDING SHARES ( 26,739) ( 117,759) PRINCIPAL PAYMENT OF CAPITAL LEASE ( 6,646) ( 4,117) ----------------- ------------------ NET CASH USED BY FINANCING ACTIVITIES ( 33,385) ( 121,876) NET INCREASE (DECREASE) IN CASH ( 397,443) 33,571 CASH AT BEGINNING OF PERIOD 1,463,726 1,511,013 ----------------- ------------------ CASH AT END OF PERIOD $1,066,283 $1,544,584 ================ ================= SUPPLEMENTAL CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD $ 100 $ 0 FOR INTEREST ================ ================= CASH PAID DURING THE PERIOD FOR INCOME TAXES $ 40,000 $ 30,000 ================ =================
- 5 - NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION THE ACCOMPANYING UNAUDITED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH THE INSTRUCTIONS TO FORM 10-Q AND 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 MONTHS ENDED DECEMBER 31, 1998 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE FISCAL YEAR ENDING SEPTEMBER 30,1999. FOR FURTHER INFORMATION REFER TO THE CONSOLIDATED FINANCIAL STATEMENTS AND FOOTNOTES THERETO INCLUDED IN THE COMPANY'S ANNUAL REPORT IN FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998. 2. ACCOUNTING POLICIES (A) PRINCIPLES OF CONSOLIDATION- THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF THE COMPANY AND ITS SUBSIDIARY. ALL SIGNIFICANT INTER-COMPANY ACCOUNTS AND TRANSACTIONS HAVE BEEN ELIMINATED IN CONSOLIDATION. (B) PROPERTY, PLANT AND EQUIPMENT- PROPERTY, PLANT AND EQUIPMENT IS DEPRECIATED OVER THE ESTIMATED USEFUL LIVES OF THE ASSETS USING BOTH STRAIGHT-LINE AND ACCELERATED METHODS. (C) RESEARCH AND DEVELOPMENT COSTS- ALL RESEARCH AND DEVELOPMENT COSTS ARE CHARGED TO EXPENSE AS INCURRED. (D) EARNINGS PER COMMON SHARE- EARNINGS PER COMMON SHARE ARE COMPUTED BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING EACH PERIOD. (E) INVENTORIES- INVENTORIES CONSIST OF THE FOLLOWING:
12/31/98 9/30/98 ------------------ ------------------ RAW MATERIALS $1,598,677 $1,534,908 WORK IN PROCESS 3,547,430 3,879,230 FINISHED GOODS 1,759,855 1,393,497 ------------------ ------------------ $6,905,962 $6,807,635
(F) INVESTMENTS - INVESTMENTS INCLUDE PRIVATE EXPORT FUNDING CORPORATION (PEFCO) NOTES. THESE NOTES ARE GUARANTEED BY THE EXPORT-IMPORT BANK OF THE UNITED STATES, AN AGENCY OF THE UNITED STATES. THE COMPANY HAS CLASSIFIED THESE SECURITIES AS "HELD-TO-MATURITY" SECURITIES, IN ACCORDANCE WITH STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES". HELD-TO-MATURITY SECURITIES ARE RECORDED AT AMORTIZED COST. AMORTIZATION OF RELATED DISCOUNTS OR PREMIUMS IS INCLUDED IN THE DETERMINATION OF NET INCOME. - 6 - 3. INCOME TAXES: DURING 1995, IT WAS DETERMINED THAT CONTINUED OPERATIONS OF ITS INTEREST CHARGE-DOMESTIC INTERNATIONAL SALES CORPORATION (IC-DISC) SUBSIDIARY'S ELECTION WAS NO LONGER ADVANTAGEOUS TO THE COMPANY. ACCORDINGLY, THE TAX ELECTION OF THE SUBSIDIARY WAS DISCONTINUED AND ITS RETAINED EARNINGS OF APPROXIMATELY $3,200,000 WERE DISTRIBUTED TO THE COMPANY. REGULATIONS PROVIDE FOR THE TAXATION OF SUCH DISTRIBUTION OVER A TEN YEAR PERIOD IN EQUAL ANNUAL INCREMENTS. UPON THE ASSUMPTION THE COMPANY'S BUSINESS IS PROFITABLE THROUGHOUT THE NEXT SIX YEARS, EXCLUDING SUCH INCREMENTAL INCOME, THE AGGREGATE INCOME TAX PAYABLE AS A CONSEQUENCE OF SUCH DISTRIBUTION WILL APPROXIMATE A MAXIMUM OF $737,000 OR $120,000 PER YEAR. NO INTEREST IS PAYABLE ON THIS UNPAID PORTION. 4. PREFERRED STOCK: THE COMPANY HAS 500,000 AUTHORIZED SHARES OF PREFERRED STOCK, NO PAR VALUE, THAT MAY BE ISSUED AT SUCH TERMS AND PROVISIONS AS DETERMINED BY THE BOARD OF DIRECTORS. NONE ARE OUTSTANDING. 5. STOCK OPTIONS: AS OF DECEMBER 31, 1998 THE COMPANY HAD AUTHORIZED 100,000 SHARES FOR NON-QUALIFIED STOCK OPTIONS. NONE HAVE BEEN ISSUED. 6. CHANGES IN ACCOUNTING POLICIES: IN FEBRUARY 1997, THE FINANCIAL ACCOUNTING STANDARDS BOARD (THE "FASB") ISSUED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 128, "EARNINGS PER SHARE" ("SFAS 128"). SFAS 128 SIMPLIFIES THE STANDARDS FOR COMPUTING EARNINGS PER SHARE AND IS EFFECTIVE FOR FINANCIAL STATEMENTS FOR BOTH INTERIM AND ANNUAL PERIODS ENDING AFTER DECEMBER 15, 1997. THE ADOPTION OF SFAS 128 DOES NOT HAVE A MATERIAL IMPACT ON THE COMPANY'S PREVIOUSLY REPORTED EARNINGS PER SHARE. IN JUNE 1997, THE FASB ISSUED SFAS NO. 130, "REPORTING COMPREHENSIVE INCOME" (SFAS NO. 130"). SFAS NO. 130 ESTABLISHES STANDARDS FOR REPORTING AND DISPLAY OF COMPREHENSIVE INCOME AND ITS COMPONENTS IN THE FINANCIAL STATEMENTS. SFAS NO. 130 IS EFFECTIVE FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997. RECLASSIFICATION OF FINANCIAL STATEMENTS FOR EARLIER PERIODS PROVIDED FOR COMPARATIVE PURPOSES IS REQUIRED. THE ADOPTION OF SFAS NO. 130 HAS NO IMPACT ON SUNAIR'S CONSOLIDATED RESULTS OF OPERATIONS, FINANCIAL POSITION OR CASH FLOWS. IN JUNE 1997, THE FASB ISSUED SFAS NO. 131, "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION" ("SFAS NO. 131"). SFAS NO. 131 ESTABLISHED STANDARDS FOR THE WAY THAT PUBLIC BUSINESS ENTERPRISES REPORT INFORMATION ABOUT OPERATING SEGMENTS IN ANNUAL FINANCIAL STATEMENTS AND REQUIRES THAT THOSE ENTERPRISES REPORT SELECTED INFORMATION ABOUT OPERATING SEGMENTS IN INTERIM FINANCIAL REPORTS ISSUED TO SHAREHOLDERS. IT ALSO ESTABLISHES STANDARDS FOR RELATED DISCLOSURES ABOUT PRODUCTS AND SERVICES, GEOGRAPHIC AREAS, AND - 7 - MAJOR CUSTOMERS. SFAS NO. 131 IS EFFECTIVE FOR FINANCIAL STATEMENTS FOR FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997. FINANCIAL STATEMENT DISCLOSURES FOR PRIOR PERIODS ARE REQUIRED TO BE RESTATED. THE ADOPTION OF SFAS NO. 131 HAS NO IMPACT ON SUNAIR'S CONSOLIDATED RESULTS OF OPERATIONS, FINANCIAL POSITION OR CASH FLOWS. 7 FINANCIAL INSTRUMENTS: THE CARRYING AMOUNTS OF CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, LOANS PAYABLE, ACCOUNTS PAYABLE AND ACCRUED INCOME TAXES PAYABLE APPROXIMATE FAIR VALUE DUE TO THE SHORT MATURITY OF THE INSTRUMENTS AND RESERVES FOR POTENTIAL LOSSES, AS APPLICABLE. - 8 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY: ---------- DURING THE FIRST THREE MONTHS OF THE CURRENT FISCAL YEAR ENDING DECEMBER 31, 1998, THE COMPANY MAINTAINED CASH AND SHORT TERM INVESTMENTS MORE THAN ADEQUATE TO COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT OCCUR. DURING THE THREE MONTH PERIOD, CASH AND SHORT TERM INVESTMENTS MAINTAINED AN AVERAGE BALANCE OF $1,243,000, COMPARED TO AN AVERAGE BALANCE OF $1,438,000 FOR THE TWELVE MONTHS ENDED SEPTEMBER 30,1998 OR AN AVERAGE BALANCE OF $1,277,000 FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997. SHORT TERM INVESTMENTS ARE TAX EXEMPT MONEY MARKET FUNDS THAT ARE READILY AVAILABLE FOR IMMEDIATE USE SHOULD THE OCCASION ARISE. IT IS ANTICIPATED THAT THE COMPANY WILL REMAIN AS LIQUID DURING THE REST OF FISCAL 1999. INVENTORIES CONTAIN NO OBSOLESCENCE AS ADJUSTMENTS ARE MADE AS THEY OCCUR. ACCOUNTS AND NOTES RECEIVABLE CONTAIN NO BAD DEBTS. INTERIM RESERVES ARE MAINTAINED TO COVER CANCELLATION CHARGES UNPAID AND ANY FREIGHT CHARGE DISPUTES. ALL MONETARY TRANSACTIONS ARE IN U.S. DOLLARS AND NO LETTERS OF CREDIT INVOLVE FOREIGN EXCHANGE. CAPITAL RESOURCES: - ------------------ DURING THE FIRST THREE MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED $38,663 FOR CAPITAL ASSETS. NO EXPENDITURES ARE CONTEMPLATED FOR PLANT EXPANSION OR EXTENSIVE MAINTENANCE. THE COMPANY HAS NO LONG TERM DEBT AND NONE IS CONTEMPLATED. LIABILITIES CONSIST OF CURRENT ACCOUNTS PAYABLE AND EXPENSES RELATED TO THE CURRENT ACCOUNTING PERIOD AND THE CAPITAL LEASE. RESULTS OF OPERATIONS: - ---------------------- DURING THE FIRST QUARTER OF THE CURRENT FISCAL YEAR ENDED DECEMBER 31, 1998, SHIPMENTS WERE $606,507, DOWN FROM SHIPMENTS OF $1,148,170 OR 47% FOR THE SAME QUARTER ONE YEAR AGO AND UP $143,926 OR 31% FOR THE FIRST QUARTER ENDED DECEMBER 31, 1996. EXPORT SHIPMENTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1998 WERE $182,579 OR 30% OF TOTAL SALES, DOWN $151,803 OR 45% FROM THE SAME PERIOD ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE FIRST THREE MONTHS OF THE CURRENT FISCAL YEAR WERE $423,928, COMPARABLE TO SHIPMENTS FOR THE SAME PERIOD ONE YEAR AGO OF $813,788, DOWN $389,860 OR 48%. MANAGEMENT CONTINUES TO MONITOR SELLING, GENERAL AND ADMINISTRATIVE EXPENSES WHICH INCREASED $14,763 FROM THE SAME PERIOD ONE YEAR AGO. THE DIRECT LABOR FORCE CONTINUES AT A REDUCED LEVEL DUE TO SUFFICIENT INVENTORY LEVELS IN FINISHED GOODS. - 9 - RESULTS OF OPERATIONS: (CONTINUED) - ---------------------- SHIPMENTS FOR THE FIRST QUARTER WERE LOWER THAN SHIPMENTS FOR THE SAME PERIOD OF ONE YEAR AGO DUE TO EXTENDED DELIVERY SCHEDULES ON NEW CONTRACTS. AS STATED IN THE PRESIDENT'S MESSAGE OF THE ANNUAL REPORT, THE COMPANY RECEIVED NEW ORDERS IN EXCESS OF $3,800,000 FOR DELIVERY OVER THE NEXT 18 MONTHS TO SUPPLY HF SUBSYSTEMS TO PROVIDE FULL DUPLEX VOICE AND DATA CAPABILITY FOR LONG RANGE POINT-TO-POINT AND GROUND-TO-AIR OPERATION AS WELL AS LONG RANGE SWITCH SYSTEMS FOR DELIVERY TO A FOREIGN NAVY. THE COMPANY CONTINUES TO BE OPTIMISTIC ABOUT FUTURE REQUIREMENTS EVEN THOUGH THE PROCUREMENT CYCLE CONTINUES TO BE EXTREMELY LONG DUE TO THE COMPLEXITY OF DESIGN OF THE SYSTEM REQUIREMENTS EXPERIENCED IN THE MARKET TODAY. NEW MARKET OPPORTUNITIES ARE BEING PURSUED IN CENTRAL AND SOUTH AMERICA AND OTHER GEOGRAPHIC AREAS NOT COVERED PREVIOUSLY AND THE COMPANY HAS REALIZED SOME BUSINESS FROM THESE AREAS AND CONTINUES TO BE OPTIMISTIC FOR INCREASED BUSINESS IN THE FUTURE. THE COMPANY HAS INVESTIGATED THE PENDING YEAR 2000 PROBLEM AND DETERMINED THE ISSUE WILL NOT HAVE A MATERIAL IMPACT ON ITS BUSINESS OPERATIONS OR ITS FINANCIAL CONDITION. THE COMPANY DOES, HOWEVER, PLAN TO REPLACE OLDER SOFTWARE WITH STATE-OF-THE-ART SOFTWARE IN THE YEAR 1999 FOR MORE EFFICIENT OPERATIONS AND INVENTORY CONTROL. THE COST FOR THIS PROJECT IS ESTIMATED AT APPROXIMATELY $75,000. THIS QUARTER THE COMPANY BEGAN THE NECESSARY STEPS TO BECOME ISO-9000 REGISTERED AND CURRENTLY IS PROCEEDING WITH THE NECESSARY DOCUMENTATION AND AUDIT PROCEDURES TO ACCOMPLISH REGISTRATION BY MID 1999. - 10 - PART II OTHER INFORMATION 5. OTHER INFORMATION NONE 6. EXHIBITS AND REPORTS ON FORM 8-K NONE - 11 - SIGNATURES ---------- 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. SUNAIR ELECTRONICS, INC. FEBRUARY 11, 1999 /S/ ROBERT URICHO, JR. DATE______________________________________ ------------------------------ ROBERT URICHO, JR., PRINCIPAL EXECUTIVE OFFICER FEBRUARY 11, 1999 /S/ SYNNOTT B. DURHAM DATE______________________________________ ______________________________ SYNNOTT B. DURHAM, PRINCIPAL ACCOUNTING OFFICER - 12 - EX-27 2 FINANCIAL DATA SCHEDULE
5 0000095366 SUNAIR ELECTRONICS, INC. 3-MOS SEP-30-1999 OCT-01-1998 DEC-31-1998 1,066,283 3,124,585 505,413 300 6,905,962 8,531,431 4,295,973 3,250,366 12,701,623 113,123 0 374,307 0 0 11,477,193 12,701,623 606,507 665,856 450,126 450,126 302,243 300 100 (86,513) (31,600) (54,913) 0 0 0 (54,913) (.01) (.01)
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