U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-12866
PHAZAR CORP
(Exact name of small business issuer as specified in its charter)
Delaware 75-1907070
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
101 S.E. 25thAvenue, Mineral Wells, Texas 76067
(Address of principal executive offices)
(940) 325-3301
(Issuer’s telephone number)
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. x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
o Large accelerated filer o Accelerated filer
o Non-accelerated filer x Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes xNo
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 2,382,728 as of April 25, 2011.
1
PHAZAR CORP AND SUBSIDIARIES
INDEX TO FORM 10-Q
2
Item 1. Financial Statements
| PHAZAR CORP AND SUBSIDIARIES | |
| CONSOLIDATED BALANCE SHEETS | |
| MARCH 31, 2011 AND MAY 31, 2010 | |
| | | | | | |
| | | March 31, 2011 | | May 31, 2010 |
| | | (Unaudited) | | |
| CURRENT ASSETS | | | |
| Cash and cash equivalents | $ 1,012,081 | | $ 2,030,774 |
| Accounts receivable: | | | |
| Trade, net of allowance for doubtful accounts of $0 | | | |
| as of March 31, 2011 and May 31, 2010 | 1,202,170 | | 748,671 |
| Inventories | | 2,967,820 | | 3,481,074 |
| Prepaid expenses and other assets | 45,761 | | 95,586 |
| Income taxes receivable | 261,231 | | 316,374 |
| Deferred income taxes | 96,441 | | 105,314 |
| Total current assets | 5,585,504 | | 6,777,793 |
| | | | |
| Property and equipment, net | 1,076,408 | | 1,170,090 |
| | | | | |
| Note receivable | | 797,993 | | 432,146 |
| Long - term deferred income tax | | 330,084 | | 232,188 |
| TOTAL ASSETS | $ 7,789,989 | | $ 8,612,217 |
| | | | | |
| |
| LIABILITIES AND SHAREHOLDERS' EQUITY |
| | | | | |
| CURRENT LIABILITIES | | | | |
| Accounts payable | | $ 300,606 | | $ 477,111 |
| Accrued liabilities | | 578,282 | | 899,072 |
| Deferred revenues | | 24,988 | | 207,514 |
| Total current liabilities | | 903,876 | | 1,583,697 |
| | | | | |
| | | | | |
| TOTAL LIABILITIES | | 903,876 | | 1,583,697 |
| | | | | |
| COMMITMENTS AND CONTINGENCIES | | - | | - |
| | | | | |
| SHAREHOLDERS’ EQUITY | | | | |
| Preferred Stock, $1 par, 2,000,000 shares authorized, none issued | | | | |
| or outstanding, attributes to be determined when issued | | - | | - |
| | | | | |
| Common stock, $0.01 par, 6,000,000 shares authorized | | | | |
| and 2,382,728 and 2,378,428 issued and outstanding | | 23,828 | | 23,785 |
| Additional paid in capital | | 4,498,773 | | 4,403,261 |
| Treasury stock, at cost, 74,691 shares in March 31, 2011 and May 31, 2010 | | (215,918) | | (215,918) |
| Retained earnings | | 2,579,430 | | 2,817,392 |
| Total shareholders’ equity | | 6,886,113 | | 7,028,520 |
| | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ 7,789,989 | | $ 8,612,217 |
| | | | | | | | | | |
See accompanying Notes to the Unaudited Consolidated Financial Statements.
3
| PHAZAR CORP AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2011 AND 2010 |
| | | | | | | | |
| | (Unaudited) | | (Unaudited) |
| | Three Months Ended | | Nine Months Ended |
| | March 31, | | March 31, |
| | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | |
| Sales and contract revenues | $ 1,991,678 | | $ 1,734,024 | | $ 6,849,510 | | $5,425,643 |
| Cost of sales and contracts | 1,276,435 | | 920,418 | | 4,001,801 | | 2,785,286 |
| Gross profit | 715,243 | | 813,606 | | 2,847,709 | | 2,640,357 |
| | | | | | | | |
| | | | | | | | |
| Selling, general and administration expenses | 707,997 | | 993,975 | | 2,048,735 | | 2,693,732 |
| Research and development costs | 94,574 | | 195,932 | | 547,106 | | 824,329 |
| Total selling, general and administration expenses | 802,571 | | 1,189,907 | | 2,595,841 | | 3,518,061 |
| | | | | | | | |
| Operating income (loss) | (87,328) | | (376,301) | | 251,868 | | (877,704) |
| | | | | | | | |
| Other income | | | | | | | |
| Interest income (expense) (net) | 13,307 | | (2,425) | | 40,853 | | 34,996 |
| Other income | 51 | | 37,367 | | 21,821 | | 14,147 |
| Total other income | 13,358 | | 34,942 | | 62,674 | | 49,143 |
| | | | | | | | |
| Income (loss) from operations before income taxes | (73,970) | | (341,359) | | 314,542 | | (828,561) |
| | | | | | | | |
| Income tax expense (benefit) | (1,490) | | (63,787) | | 110,637 | | (206,757) |
| | | | | | | | |
| Net income (loss) from continuing operations | (72,480) | | (277,572) | | 203,905 | | (621,804) |
| | | | | | | | |
| Discontinued operations expense | (724,789) | | (82,704) | | (724,789) | | (58,075) |
| Income tax benefit from discontinued operations | 246,428 | | 28,119 | | 246,428 | | 19,745 |
| Loss from discontinued operations | $ (478,361) | | $ (54,585) | | $ (478,361) | | $ (38,330) |
| | | | | | | | |
| Net loss | $ (550,841) | | $ (332,157) | | $ (274,456) | | $(660,134) |
| | | | | | | | |
| Basic income (loss) per common share | | | | | | | |
| Continuing operations | $ (0.03) | | $ (0.14) | | $ 0.09 | | $ (0.29) |
| Discontinued operations | (0.21) | | - | | (0.21) | | - |
| Net income (loss) per common share | $ (0.24) | | $ (0.14) | | $ (0.12) | | $ (0.29) |
| | | | | | | | |
| Diluted loss per common share | | | | | | | |
| Continuing operations | $ (0.03) | | $ (0.14) | | $ 0.09 | | $ (0.29) |
| Discontinued operations | (0.21) | | - | | (0.21) | | - |
| Net income (loss) per common share | $ (0.24) | | $ (0.14) | | $ (0.12) | | $ (0.29) |
| | | | | | | | |
| | | | | | | | |
| Basic weighted average of common shares outstanding | 2,307,588 | | 2,301,608 | | 2,305,987 | | 2,299,556 |
| Diluted weighted average of common shares outstanding | 2,307,588 | | 2,301,608 | | 2,305,987 | | 2,299,556 |
| | | | | | | | | | |
See accompanying Notes to the Unaudited Consolidated Financial Statements.
4
| PHAZAR CORP AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| FOR THE NINE MONTHS ENDED MARCH 31, 2011 AND 2010 |
| | |
| | (Unaudited) |
| | Nine Months Ended |
| | March 31, | | March 31, |
| 2011 | 2010 |
| | | | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net loss | $ (274,456) | | $ (660,134) |
| Adjustments to reconcile net loss to net cash | | | |
| used by operating activities: | | | |
| Depreciation | 98,784 | | 105,177 |
| Stock based compensation | 84,829 | | 184,410 |
| Deferred federal income tax | (104,040) | | (58,998) |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | 4,887 | | 404,515 |
| Inventories | 463,899 | | (68,399) |
| Income taxes receivable | 25,538 | | (199,150) |
| Prepaid expenses | 29,781 | | (375) |
| Accounts payable | (496,463) | | (53,938) |
| Accrued liabilities | 118,202 | | 134,419 |
| Deferred revenues | (3,716) | | 142,705 |
| Net cash used by operating activities | (52,755) | | (69,767) |
| | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Funding of note receivable | (323,000) | | (379,993) |
| Purchase of property and equipment | (16,003) | | (148,760) |
| Net cash used by investing activities | (339,003) | | (528,753) |
| | | | |
| | | | |
| Net decrease in cash and cash equivalents | (391,758) | | (598,520) |
| CASH AND CASH EQUIVALENTS, beginning of period | 1,403,839 | | 3,036,602 |
| CASH AND CASH EQUIVALENTS, end of period | $ 1,012,081 | | $ 2,438,082 |
See accompanying Notes to the Unaudited Consolidated Financial Statements.
5
PART I
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of March 31, 2011, the results of operations for the three and nine months ended March 31, 2011 and March 31, 2010, and the cash flows for the nine months ended March 31, 2011 and 2010. These results have been determined on the basis of generally accepted accounting principles in the United States of America and have been applied consistently with those used in the preparation of the Company’s audited consolidated financial statements for its fiscal year ended May 31, 2010. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended May 31, 2010.
Change in Year End
On July 21, 2010, the Company’s Board of Directors approved the change in its fiscal year from May 31 to June 30. As the transition period covers a period of one month, the Company was not required to file a transition report, but instead, was required to include information on the transition period from June 1, 2010 through and including June 30, 2010 in the quarterly report on Form 10-Q for the quarter ended September 30, 2010. Those financial statements include the consolidated balance sheet of the Company as of June 30, 2010 and the consolidated statement of operations and cash flows for the one month period ended June 30, 2010. The Company chose to recast the three and nine-month periods ended March 31, 2010 for comparative purposes in filing the third quarter Form 10-Q of fiscal year 2011.
Use of Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could vary from the estimates that were used.
Revenue Recognition
Revenue from short-term contracts calling for delivery of products is recognized as the product is shipped. Revenue and costs under certain long-term fixed price contracts with the United States Government are recognized on the units of delivery method. This method recognizes as revenue the contract price of units of the product delivered during each period and the costs allocable to the delivered units as the cost of earned revenue. Costs allocable to undelivered units are reported in the balance sheet as inventory. Amounts in excess of agreed upon contract price for customer directed changes, constructive changes, customer delays or other causes of additional contract costs are recognized in contract value if it is probable that a claim for such amounts will result in additional revenue and the amounts can be reasonably estimated. Revisions in cost and profit estimates are reflected in the period in which the facts requiring the revision become known and are estimable. Losses on contracts are recorded when identified.
6
NOTE 2 NET INCOME (LOSS) PER COMMON SHARE
Income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. The income (loss) per share and weighted average shares outstanding were as follows for the nine month period ended March 31, 2011 and 2010, respectively.
| | | Nine Months Ended |
| | | March 31, 2011 | | March 31, 2010 |
| Numerator: | | | | |
| Net income (loss) | | $ (274,456) | | $ (660,134) |
Numerator for basic and diluted income (loss) per share | | $ (274,456) | | $ (660,134) |
| | | | | |
| Denominator: | | | | |
| Weighted-average shares outstanding-basic | | | | |
| Effect of dilutive securities: | | 2,305,987 | | 2,299,556 |
| Stock options | | - | | - |
| | | | | |
Denominator for diluted income (loss) per share- Weighted-average shares | | 2,305,987 | | 2,299,556 |
| | | | | |
| | | | | |
| Basic (loss) per share | | $ (0.12) | | $ (0.29) |
| | | | | |
| Diluted (loss) per share | | $ (0.12) | | $ (0.29) |
NOTE 3 CONTINGENCIES
Litigation
On August 15, 2008, Janet McCollum, as personal representative of the Estate of Richard Alan Catoe, deceased, filed a wrongful death complaint against the University of West Florida, Diamond Enterprise, Inc., North Safety Products, L.L.C. a/k/a North Safety Products, Inc. and Antenna Products Corporation (the”Lawsuit”) in Circuit Court in Escambia County, Florida. Antenna Products Corporation is PHAZAR CORP's wholly owned and principal operating subsidiary.
The lawsuit alleges that the deceased fell to his death while climbing a ladder inside a water tower on the University of West Florida campus to install antennas. The lawsuit further alleges that while the deceased was descending the ladder, he wore an Antenna Products Corporation safety sleeve affixed to a safety rail manufactured by defendant North Safety Products that was attached to the ladder and that the safety sleeve and rail were allegedly defective and failed to prevent the deceased from falling, thus causing his death. Plaintiff seeks recovery of unspecified amounts from all the defendants. Antenna Products Corporation denies any liability to plaintiff and anticipates being dismissed from the lawsuit. However, if Antenna Products Corporation were found to be responsible or liable, the Company would not expect such costs to be material.
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PHAZAR CORP AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management’s discussion and analysis of certain significant factors that affected the Company’s financial condition and operating results for the period included in the consolidated financial statements in Item 1.
Company Overview
PHAZAR CORP’s continuing operation is that of its subsidiaries, Antenna Products Corporation, Phazar Antenna Corp. and Thirco, Inc. The management discussion presented in this item relates to the operations of subsidiary units and the associated consolidated financials.
PHAZAR CORP operates as a holding company with Antenna Products Corporation, Phazar Antenna Corp. and Thirco, Inc. as its wholly owned subsidiaries. Antenna Products Corporation and Phazar Antenna Corp. are operating subsidiaries with Thirco, Inc. serving as an equipment leasing company to PHAZAR CORP’s operating units. Antenna Products Corporation designs, manufactures and markets antenna systems, towers and communication accessories worldwide. The United States Government, military and civil agencies and prime contractors are Antenna Products Corporation’s principal customers. Phazar Antenna Corp. designs and markets fixed and mobile antennas for commercial wireless applications that include DAS (Distributed Antenna Systems) for 700 MHz, 850 MHz, AWS and PCS mobile communication bands, WiMAX, WiFi and UNII-Band antennas for broadband communications, ITS (Intelligent Transportation System) antennas for traffic and asset control and AMR antennas for meter reading applications.
PHAZAR CORP is primarily a build-to-order company. As such, most United States government and commercial orders are negotiated firm-fixed price contracts.
Change in Fiscal Year End
On July 21, 2010, the Company’s Board of Directors approved the change in its fiscal year from May 31 to June 30. As the transition period covers a period of one month, the Company was not required to file a transition report, but instead, was required to include information on the transition period from June 1, 2010 through and including June 30, 2010 in the quarterly report on Form 10-Q for the quarter ended September 30, 2010. Those financial statements include the consolidated balance sheet of the Company as of June 30, 2010 and the consolidated statement of operations and cash flows for the one month period ended June 30, 2010. The Company chose to recast the three and nine-month periods ended March 31, 2010 for comparative purposes in filing the third quarter Form 10-Q of fiscal year 2011.
Executive Level Overview
The following table presents selected data of PHAZAR CORP. This historical data should be read in conjunction with the consolidated financial statements and the related notes.
| | Three Month Period Ended March 31, | | Nine Month Period Ended March 31, |
| | 2011 | 2010 | | 2011 | 2010 |
Net Sales | $ 1,991,678 | $ 1,734,024 | | $ 6,849,510 | $ 5,425,643 |
| | | | | | |
| Gross profit margin percent | 36% | 47% | | 42% | 47% |
| | | | | | |
| Net income (loss) | $ (550,841) | $ (332,157) | | $ (274,456) | $ (660,134) |
| | | | | | |
| Net income (loss) per share | $ (0.24) | $ (0.14) | | $ (0.12) | $ (0.29) |
8
| | Three Month Period Ended March 31, | | Nine Month Period Ended March 31, |
| | 2011 | 2010 | | 2011 | 2010 |
| Total assets | $ 7,789,989 | $ 8,395,513 | | $ 7,789,989 | $ 8,395,513 |
| | | | | | |
| Total liabilities | $ 903,876 | $ 949,682 | | $ 903,876 | $ 949,682 |
| | | | | | |
| Capital expenditures | $ - | $ 141,048 | | $ 16,003 | $ 148,760 |
Results of Operations
Third Quarter Ended March 31, 2011 (“2011”), Compared to the Third Quarter Ended March 31, 2010 (“2010”)
PHAZAR CORP’s consolidated sales from operations were $1,991,678 for the quarter ended March 31, 2011 compared to sales of $1,734,024 for the third quarter ended March 31, 2010. The Company’s revenue increased $257,654, or 15%, representing a significant upturn in traditional government segments of our business offset by downturns in both the commercial and safety climb products along with moving all mesh network radio product sales to discontinued operations for prior year.
Cost of sales and contracts from operations were $1,276,435 for the quarter ended March 31, 2011, compared to $920,418 for the quarter ended March 31, 2010, up $356,017, or 39%. Gross profit margin for the quarter, at 36% is down 11 percentage points from the 47% gross margin reported in the comparable period last year. Start up expenses related to new tower designs for a customer order along with continued increase in plant utilization overhead on lower throughput were the primary factors in the decline.
Sales and administration expenses were down $285,978 or 29% for the quarter ended March 31, 2011, to $707,997 from $993,375 in the prior year, reflecting lower wages in both Engineering and Marketing Departments and continued increase in plant utilization overhead on lower throughput. Discretionary product development spending for the quarter ended March 31, 2011 was $94,574, or 5% of sales, compared to $195,932, or 10% of sales for the comparable period last year.
On January 7, 2011, the Company announced that after a thorough review of the progress and status of the True Mesh Network Radio program the Board of Directors concluded that commercial viability and profitability was unlikely to be achievable in the foreseeable future and voted to discontinue further development. As a result, the Company has recorded a charge of $478,361 and $54,585 for discontinued operations, net of tax for the quarters ended March 31, 2011and March 31, 2010, respectively
The Company recognized a net loss of $550,841, or $0.24 per share for the three month period ended March 31, 2011 compared to a net loss of $332,157, or $0.14 per share for the comparable period in the prior year.
Nine Months Ended March 31, 2011 (“2011”), Compared to the Nine Months Ended March 31, 2010 (“2010”)
Consolidated sales from operations for PHAZAR CORP were $6,849,510 for the nine months ended March 31, 2011 compared to $5,425,643 for the nine months ended March 31, 2010. The Company’s sales increased by $1,423,867, or 26%, representing a continued upturn in both the commercial products and traditional government segments of our business offset by moving all sales related to the mesh network radio product line to discontinued operations.
Costs of sales and contracts from operations were $4,001,801 for the nine months ended March 31, 2011 compared to $2,785,286 for the comparable period in fiscal year 2010, up $1,216,515, or 44%. The movement in cost of sales is attributed to a continued increase in plant utilization overhead on lower throughput and start up expenses related to new tower designs for a customer order. The increase resulted in a five percentage point decline in the gross profit margin for the nine month period ended March 31, 2011, at 42% compared to 47% for the same period in prior year.
Sales and administration expenses of $2,048,735 were down $644,997, or 24% for the nine months ended March 31, 2011 compared to $2,693,732 for the nine month period ended March 31, 2010. The decrease in sales and administration expense reflects lower stock compensation expense, lower wages along with continued increase in plant utilization overhead on lower throughput.
9
Discretionary product development spending for the nine month period ended March 31, 2011 was $547,106, or 8% of sales, compared to $824,329, or 14% of sales for the comparable period last year. Year over year there is a decrease of $277,223, or
34%.
On January 7, 2011, the Company announced that after a thorough review of the progress and status of the True Mesh Network Radio program the Board of Directors concluded that commercial viability and profitability was unlikely to be achievable in the foreseeable future and voted to discontinue further development. As a result, the Company has recorded a charge of $478,361 and $38,330 for discontinued operations, net of tax for the nine month period ended March 31, 2011 and March 31, 2010, respectively.
The Company recorded a net loss of $274,456, or $0.12 per share for the nine month period ended March 31, 2011 compared to a net loss of $660,134, or $0.29 per share for the comparable period in prior year.
Liquidity and Capital Resources
Sources of Liquidity
Based on current trends, funds from operations and current cash balances PHAZAR CORP believes there are sufficient resources to run the Company’s operations for at least the next twelve months. The Company currently does not have a general credit facility.
Capital Requirements
Management of the operating subsidiaries evaluates the facilities and reviews equipment requirements for existing and projected contracts on a regular basis. For the nine month period ended March 31, 2011, there were $16,003 in capital expenditures for new and replacement equipment compared to $148,760 of expenditures in the comparable period of recast fiscal year 2010.
At March 31, 2011, PHAZAR CORP had cash and cash equivalents of $1,012,081. There were $29,488 of deferred revenues at March 31, 2011.
Cash Flows
Operating Activities
Cash and cash equivalents of $1,012,081 at March 31, 2011 are down $391,758, or 28% on a balance of $1,403,839 as of June 30, 2010. The primary components comprising the negative $52,755 of cash flow from operations consists of a $496,463 decrease in accounts payable and the $274,456 net loss offset by a $463,899 decrease in inventories and a $118,202 increase in accrued expenses. The decrease in inventories for the nine month period ended March 31, 2011 is the result of writing off $524,232 of inventory related to the discontinuing development of the Mesh Network Radio product line.
Investing Activities
Cash of $339,003 was used in investing activities during the nine month period ended March 31, 2011, which consists of $323,000 of additional funding for the purchase of a senior secured convertible note obligation with warrants involving a non-related party and $16,003 of capital expenditures.
Financing Activities
There were no financing activities during the nine month period ended March 31, 2011 and 2010. At March 31, 2011 and 2010, PHAZAR CORP had no long-term debt outstanding.
10
Forward Looking Statement Disclaimer
This Form 10-Q contains forward-looking information within the meaning of Section 29A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performances and underlying assumption and other statements, which are other
than statements of historical facts. Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties, which could cause actual results, or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties, but there can be no assurance that management’s expectations, beliefs or projections will result, or be achieved, or accomplished.
Item 4. Controls and Procedures
Management’s Evaluation of Internal Controls over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and disposition of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of our Company’s subsidiaries.
The Company has had no change during the quarter ending March 31, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer evaluated the Company’s disclosure controls and procedures as of March 31, 2011. In making their assessment, the Company's Chief Executive Officer and Chief Financial Officer were guided by the releases issued by the SEC and to the extent applicable was based upon the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2011.
11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The information provided in Note 3 of the unaudited Consolidated Financial Statements is hereby incorporated into this Part II, Item I by reference.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements. See Item 1.
2. Financial Statement Schedules. Not applicable.
All other schedules have been omitted because the required information is shown
in the consolidated financials or notes thereto, or they are not applicable.
3. Exhibits. See Index to Exhibits for listing of exhibits which are filed herewith or incorporated by reference
(b) Reports on Form 8-K.
1. On October 21, 2010, the registrant filed a Form 8-K for the purpose of announcing a major website upgrade for Antenna Products Corporation
2. On November 11, 2010, the registrant filed a Form 8-K for the purpose of announcing a web conference for a presentation held at the Southwest IDEAS Investor Conference held in Dallas, Texas
3. On January 11, 2011, the registrant filed a Form 8-K for the purpose of announcing the discontinuance of the development of the True Mesh Network Radio Program
4. On January 19, 2011, the registrant filed a Form 8-K for the purpose of announcing its second quarter 2011 financial results
5. On February 2, 2011, the registrant filed a Form 8-K for the purpose of announcing the appointment of an additional director
6. On February 14, 2011, the registrant filed a Form 8-K for the purpose of disclosing a notice of listing deficiency letter from NASDAQ
7. On April 7, 2011, the registrant filed a Form 8-K for the purpose of disclosing that NASDAQ had accepted the proposed listing compliance plan and closed the listing deficiency matter
8. On May 13, 2011, the registrant filed a Form 8-K for the purpose of announcing its third quarter 2011 financial results
12
SIGNATURE
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.
PHAZAR CORP
| Date: May 13, 2011 | /s/GARLAND P. ASHER |
| | Garland P. Asher, Principal Executive Officer |
| | and Director |
EXHIBIT INDEX
Exhibit 3.(i) - Registrant's Articles of Incorporation, as amended, incorporated by reference to the like numbered exhibit in the Registrant's Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000, filed on February 20, 2004
Exhibit 3.(ii) - Registrant’s By Laws, incorporated by reference to the like numbered exhibit in the Registrant’s Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000, filed on February 20, 2004
Exhibit 4.1(1) - 2006 Incentive Stock Option Plan, incorporated by reference as Exhibit A to the Registrant’s Definitive Proxy Statement dated September 15, 2006 and filed on September 15, 2006. Also incorporated by reference to the like numbered exhibit in the Registrant’s Form S-8 dated January 8, 2007 and filed on January 8, 2007
Exhibit 4.1(2) - 2009 Equity Compensation Plan dated April 22, 2009, incorporated by reference to Exhibit 10-1 of the Registrant’s Form S-8, filed on April 27, 2009
Exhibit 10.b - Amended and restated agreement with Garland Asher dated September 10, 2009, incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-Q, ended November 30, 2009 and filed on January 14, 2010
Exhibit 14.1- Code of Ethics and Business Conduct for the Senior Executive Officers and Senior Financial Officers incorporated by reference to the like numbered exhibit in the Registrant’s annual report on form 10-KSB for the fiscal year ended May 31, 2004, filed on August 6, 2004
Exhibit 21. - A list of all subsidiaries of the Registrant, incorporated by reference to the like numbered exhibit in the Registrant’s Annual Report on Form 10-KSB/A for the fiscal year ended May 31, 2000 filed on February 20, 2004
Exhibit 23.1 - Consent of Weaver and Tidwell, L.L.P. incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-K/A for the fiscal year ended May 31, 2009, filed on March 24, 2010
Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (attached)
Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (attached)
Exhibit 32.1 - Section 1350 Certification (attached)
Exhibit 99.1 - Nominating Committee Charter incorporated by reference to the like numbered exhibit in the Registrant’s Form 8-K filed on November 7, 2005
Exhibit 99.1(2) - Audit Committee Charter incorporated by reference to the like numbered exhibit in the Registrant’s Form 10-K for the year ending May 31, 2010 filed on August 19, 2010
