Third quarter fiscal 2004 compared to third quarter fiscal 2003
The Company's sales for the nine months ended January 31, 2004 were $7,013,130 compared to $4,579,549 for the nine months ended January 31, 2003, an increase of 53%. CAUTION: Modification and Avionics currently contribute to this increase. There is no assurance that activity will continue at this level.
Discussion of the specific changes by operation at each business segment follows:
Aircraft Modifications: Sales from the Aircraft Modifications business segment, including modified aircraft, increased $1,882,192 (107%) from $1,758,810 in the nine months of the prior fiscal year to $3,641,002 in the first nine months of fiscal 2004. Third quarter operating income was $353,197 in fiscal 2004 compared to income of $167,179 in fiscal 2003. Our emphasis is on for the Learjet 20 series including the purchase, modification and resale of upgraded twenty-first century Learjets. Our long-term effort is to enhance our position in the market and increase market share of all modification products.
Avionics: Sales from the Avionics business segment were $1,347,420 for the nine months ended January 31, 2004 compared to $968,085 in the comparable period of the preceding year, an increase of 39%. The increase resulted from Defense Military related Classic Aviation products sales. Operating income for the nine months ended January 31, 2004, was $100,923 compared to a profit of $137,367 for the nine months ended January 31, 2003. Defense and Military related Classic Avionics products are being designed, manufactured and sold to military aircraft manufacturers. Management plans for this business segment to continue to increase in future years due to the additional new Classic Aviation Products.
SCADA Systems and Monitoring Services: Sales from the Scada Systems and Monitoring Services business segment for the nine months ended January 31, 2004 were $828,857 compared to sales of $836,945 for the comparable period of the prior year a decrease of 1.0%. Operating profit for the nine months was $346,141 compared to $359,118 for the nine months ended January 31, 2003. Revenue fluctuates due to the introduction of new products and services and related installations of these products. The Company's contracts with its two largest customers have been renewed for fiscal 2004.
Temporary Services: BTS provides managed temporary personnel to corporate clients to cover personnel shortages on a short and/or long term basis. This service is being marketed in Kansas and Missouri. Currently, this Company is inactive.
Management Services: Management consulting and professional services sales for the nine months ended January 31, 2004 were $347,378 compared to $228,169 in the comparable period of the preceding year, an increase of 52%.
Professional Services: We provide as a management service licensed architectural services through our subsidiary, BCS Design, Inc. These services include commercial and industrial building design, graphic representation, engineering and construction management.
Selling, General and Administrative (SG&A): Expenses in the nine months ended January 31, 2004, were $2,049,443 or (29%) of sales compared to $1,812,196 or (40%) of sales for the nine months ended January 31, 2003, an increase of $237,247 or 13%.
Other Income (Expense): Interest expense for the nine months ended January 31, 2004, decreased $23,592 from $133,382 in the first nine months of the prior year to $110,289. The company continues to use its line of credit to maintain operations.
The Company employed 68 at January 31, 2004, and 55 at January 31, 2003.
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EARNINGS
The Company recorded income of $483,943 in the nine months ended January 31, 2004. This is comparable to a profit of $46,385 in the nine months ended January 31, 2003. Income (Loss) per share is $0.01 and $0.00 for the nine months ending January 31, 2004, and January 31, 2003, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Borrowed funds have been used primarily for working capital. Bank (Industrial State Bank) debt related to the Company's operating line was $145,463 at January 31, 2004, and was $366,887 at January 31, 2003.
The Company's unused line of credit was approximately $354,537 as of January 31, 2004 and approximately $133,113 as of January 31, 2003. The interest rate on the Company's line of credit is prime plus two, as of March 5, 2004, the interest rate is 7.0%.
The Company plans to continue using the promissory notes payable to fund working capital. The promissory notes range from one hundred eighty days to three hundred sixty five days. The Company believes the extensions will continue and does not anticipate the repayment of these notes in fiscal 2004. The extension of the promissory notes-payable is consistent with prior years. If the Bank were to demand repayment of the notes payable the Company currently does not have enough cash to pay off the notes without materially adversely affecting the financial condition of the Company.
The Company does not, as of January 31, 2004, have any material commitments for other capital expenditures other than the terms of the Indian gaming Management Agreements. Depending upon the development schedules, the Company will need additional funds to complete its currently planned Indian gaming opportunities. The Company will use current cash available as well as additional funds, for the start up and construction of gaming facilities. The Company anticipates initially obtaining these funds from internally generated working capital and borrowings. After a few gaming facilities become operational, gaming operations will generate additional working capital for the start up and construction of other gaming facilities. The Company expects that its start up and construction financing of gaming facilities will be replaced by other financial lenders, long term financing through debt issue, or equity issues.
FORWARD LOOKING INFORMATION
The information set forth below includes "forward-looking" information as outlined in the Private Securities Litigation Reform Act of 1995. The Cautionary Statements, filed by the Company as Exhibit 99 to its Form 10-K, are incorporated herein by reference and you are specifically referred to such Cautionary Statements for a discussion of factors which could affect the Company's operations and forward-looking statements contained herein.
Part I Item 3
Quantitative and Qualitative Disclosures about Market Risk.
None
Part I Item 4
Controls and Procedures. We maintain a set of disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Our principal executive and financial officers have evaluated our disclosure controls and procedures within 90 days prior to the filing of this Quarterly Report on Form 10-Q and have determined that such disclosure controls and procedures are effective.
Subsequent to our evaluation, there were no significant changes in internal controls or other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.
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