UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES ACT OF 1934
For the fiscal quarter ended July 31, 1997 Commission file number 0-14361
TROPIC COMMUNICATIONS, INC.
(Exact Name of Company as Specified in Its Charter)
Delaware 31-1166419
(State or other jurisdiction of (I. R. S.Employer I. D. Number)
incorporationor organization)
3021 Bethel Road, Suite 208, Columbus, Ohio 43220
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (614) 538-0660
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 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 ____
The Company has 33,239,166 shares of $0.15 par value common stock outstanding as
of September 30, 1997.
TROPIC COMMUNICATIONS, INC.
FORM 10-Q
For the Quarter Ended July 31, 1997
INDEX
Part I: Financial Information
Page
Item 1. Financial Statements
(a) Consolidated Balance Sheets as of July 31, 1997
and April 30, 1997 3
(b) Statement of Consolidated Operations for the Three
Months Ended July 31, 1997 and 1996 4
(c) Statement of Consolidated Cash Flow for the Three
Months Ended July 31, 1997 and 1996 5
(d) Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II: Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibit Index and Reports on Form 8-K 12
Signatures 17
PART I
Item 1. Financial Statements
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
July 31, April 30,
1997 1997
Assets:
Cash $ 1,519 $ 2,068
Deposits and accounts receivable (net of
allowance for doubtful accounts of $2,005
and $5,532, respectively) 16,827 25,396
Investment in leased equipment 13,500,220 -
Equipment notes and accrued interest receivable - 198,700
Leased property under capital lease, at
cost (net of accumulated amortization of
$41,711 and $3,567,799, respectively) 262,466 270,915
Property and equipment, at cost (net of
accumulated depreciation of $364,620 and
$363,686, respectively) 65,735 65,859
Cost in excess of net assets acquired (net of
accumulated amortization of $55,180 and
$50,552,respectively) 137,327 141,955
Investment in unconsolidated affiliates 903 903
Broadcast rights 35,661 46,449
Other assets 14,398 17,498
------------ ------------
Total Assets $ 14,035,056 $ 769,743
============ ============
Liabilities:
Accounts payable and accrued expenses $ 300,977 $ 281,821
Note and accrued interest payable - related
party 332,268 315,440
Notes and accrued interest payable 607,253 592,799
Note and accrued interest payable - leased
equipment investment 14,106,258 -
Broadcast rights 35,661 46,449
Capital lease obligations and accrued
interest payable - 198,700
Accrued officer compensation and
interest payable 156,315 147,240
Unearned income 1,366 1,766
------------ ------------
Total Liabilities 15,540,098 1,584,215
------------ ------------
Shareholders' Equity (Deficit):
Preferred stock, $0.01 par value, 1,000,000
shares authorized, none issued and outstanding - -
Common stock, $0.15 par value, 50,000,000 shares
authorized, 3,711,566 and 3,254,566 shares
issued, respectively) 556,735 556,735
Paid in capital 9,007,109 9,007,109
Retained deficit (11,057,298) (10,366,728)
------------ ------------
(1,493,454) (802,884)
Treasury stock, at cost, 2,400 shares (11,588) (11,588)
------------ ------------
Total Shareholders' Equity (Deficit) (1,505,042) (814,472)
------------ ------------
Total Liabilities and Shareholders' $ 14,035,056 $ 769,743
Equity (Deficit) ============ ============
The accompanying notes are an integral part of these financial statements.
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Operations
Three Months Ended July 31,
---------------------------
1997 1996
Revenues:
Rental income $ - $ 2,448
Commissions, fees, advertising
and other income 131,420 878,037
Interest income 2,839 350,888
------------ ------------
Total Revenues 134,259 1,231,373
------------ ------------
Cost and Expenses:
Marketing, administration and other
operating expenses 168,860 272,993
Advisory services - 50,250
Interest expense - related party 13,306 18,327
Interest expense 625,552 364,369
Depreciation and amortization of equipment 9,383 12,515
Amortization of cost in excess of net
assets acquired and other intangible assets 7,728 57,628
------------ ------------
Total Costs and Expenses 824,829 776,082
------------ ------------
Net Income (Loss) $ (690,570)$ 455,291
============ ============
Primary Net Loss Per Share $ (0.19)$ 0.13
============ ============
Fully Diluted Net Loss Per Share $ (0.19)$ 0.13
============= ============
Average Number of Common and
Common Equivalent Shares:
Primary 3,709,166 3,406,340
Fully diluted 3,709,166 3,406,340
The accompanying notes are an integral part of these financial statements.
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Cash Flows
Increase in Cash and Cash Equivalents
Three Months Ended July 31,
---------------------------
1997 1996
Cash Flows From Operating Activities:
Rental receipts $ - $ 2,448
Commissions, fees and other receipts 98,242 46,801
Marketing, administrative and other
operating payments (98,524) (301,298)
Interest receipts - 2,929
Interest payments (1,284) (2,397)
------------ ------------
Net Cash Used For Operating
Activities (1,566) (251,517)
------------ ------------
Cash Flows From Investing Activities:
Purchase of property and equipment (810) (485)
Investment in unconsolidated subsidiaries - (300)
------------ ------------
Net Cash Used For Investing Activities (810) (785)
------------ ------------
Cash Flows From Financing Activities:
Proceeds from related party loans 2,515 -
Proceeds from issuance of stock - 375,250
Principal payments under other borrowings - (21,500)
Principal payments under officer loans - (11,500)
Principal payments under capital lease
obligations and other financing (688) (1,658)
------------ ------------
Net Cash Provided By Financing
Activities 1,827 340,592
------------ ------------
Net Increase (Decrease) in Cash and
Cash Equivalents (549) 88,290
Cash and Cash Equivalents at
Beginning of Period 2,068 14,021
------------ ------------
Cash and Cash Equivalents at
End of Period $ 1,519 $ 102,311
============ ============
.
The accompanying notes are an integral part of these financial statements.
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Statement of Consolidated Cash Flows
Reconciliation of Net Loss to
Net Cash Used For Operating Activities
Three Months Ended July 31,
---------------------------
1997 1996
Net income (loss) $ (690,570) $ 455,291
------------ ------------
Adjustment to reconcile net income (loss) to
net cash used for operating activities:
Expenses and revenues not affecting operating
cash flows:
Depreciation and amortization of
equipment and intangible assets 17,111 70,143
Leasing interest income (2,839) (350,110)
Leasing interest expense 2,839 350,110
Fee income recognized from stock retained
in unconsolidated affiliates - (800,000)
Changes in assets and liabilities:
Accrued interest income (3,562) 2,151
Accrued interest expense 28,698 30,189
Note, accounts and commissions
receivable 12,131 6,587
Other assets - (8,470)
Note and accounts payable, and
accrued expenses 635,026 (7,408)
Other (400) -
------------ ------------
Total Adjustments 689,004 (706,808)
------------ ------------
Net Cash Used for Operating Activities $ (1,566)$ (251,517)
============ ============
Supplemental Cash Flow Information
Investment in Finance Assets. The Company acquires leases of equipment and
leases receivable partially by assuming existing financing. Also, the Company
may sell or dispose of such assets with a commensurate transfer of any related
financing to the transferee. During the three months ended July 31, 1997
leasehold tenancy positions terminated which reduced the gross value of Leased
Property Under Capital Lease by $3,518,537 and accumulated amortization by an
equivalent amount. There were no acquisitions or disposals of equipment lease
portfolio assets in the three months ended July 31, 1997.
On May 1, 1997 the Company acquired an interest in a leased paper processing
plant for $13,500,220 and issued a secured promissory note for 100% of the
purchase price of the investment (see Note 3).
See accompanying notes to consolidated financial statements.
TROPIC COMMUNICATIONS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. Consolidated Financial Statements
The consolidated balance sheet as of July 31, 1997, the statement of
consolidated operations for the three months ended July 31, 1997, and the
statement of consolidated cash flows for the three months ended July 31, 1997,
have been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
July 31, 1997, and for all periods presented, have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's April 30, 1997 and 1996, annual Report
to the Securities and Exchange Commission on Form 10-K.
Certain information and footnote disclosure contained in these financial
statements that are not historical facts are forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, the forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projections.
2. Advertising Revenue and Barter Transactions
During the three months ended July 31, 1997 and 1996 the Company recognized
$81,419 and $77,357 of advertising revenue, respectively, which is included in
commissions, fees, advertising and other income. Such advertising revenue
included $41,842and $38,092 of barter transaction revenue in 1997 and 1996,
respectively. Also, the Company recognized $41,842 and $38,092 of barter
transaction expense, respectively, which is included in marketing,
administrative and other operating expenses. The amount of goods and services
which were received or used prior to the transmission of advertising was
insignificant as of the balance sheet date.
3. Investment in Leased Equipment and Notes Payable
On May 1, 1997 the Company acquired 100% of the capital stock of a
corporation owning a 10.47% interest in a leased paper processing plant. The
purchase price of the interest was $13,500,220 which was financed pursuant to
the terms of a secured promissory note due on March 1, 2001 with interest at the
rate of 17.723% per annum. In the first fiscal quarter ending July 31, 1997 the
Company recognized $50,000 of income and $606,037 of interest expense related to
this transaction. The Company expects to dispose of this interest as part of the
cessation of its equipment leasing business pursuant to the RALI Acquisition
undertaking.
4. Subsequent Events
On September 18, 1997, the Company issued 26,400,000 shares of its restricted
$.15 par value common stock in exchange for 100% of the issued and outstanding
capital stock of R.A. Logistics, Inc., a Delaware corporation ("RALI" and the
"RALI Acquisition"). RALI is a newly formed holding company owning 100% of the
issued and outstanding capital stock of two subsidiary corporations, B. Airways,
Inc. and B. Airways Air Cargo, Inc. both Florida corporations ("BAACI" and
"BAI", respectively). The consolidated net assets of RALI as of the date of
closing were approximately $279,500, unaudited. BAACI is a newly formed
corporation organized to operate as an air freight consolidator by Messrs Angel
Munoz and Ronald Vimo. BAACI provides air cargo consolidation services operating
from a shared warehouse facility located at the Miami International Airport.
BAACI consolidates air cargo for shipment via a Boeing 747-200 via approximately
4 round trips weekly between Miami International Airport and Central and South
America. The BAACI aircraft is provided at a rate of $4,750 per operating hour
plus fuel. Operating since September 2, 1997, BAACI had booked approximately
$1,708,700 in gross revenue through September 30, 1997. BAI is a non-operating
company having an application pending with the U.S. Department of Transportation
and the Federal Aviation Authority for operation as a Part 135 all cargo air
carrier. In addition, BAI
has a $10,000 deposit on a purchase for a DC-3 aircraft which BAI anticipates
will be operated within the Caribbean Basin.
The Company anticipates that it will account for the acquisition based upon
the historic costs of the assets and liabilities of both the Company and RALI.
The following unaudited financial forecast summarizes a forecasted consolidated
condensed balance sheet, statement of operations and earnings per share for the
year ending September 18, 1998 (one year from the stock exchange date). The
results do not purport to be indicative of what will occur in the future.
Forecasted Condensed Balance Sheet
Assets $ 3,375,000
===============
Liabilities $ 2,000,000
Shareholders' Equity 1,375,000
---------------
Total Liabilities and
Shareholders' Equity $ 3,375,000
===============
Forecasted Condensed Statement of Operations
Net Sales $ 20,400,000
===============
Net Income $ 600,000
===============
Net Income per Common Share:
Primary $ 0.02
===============
Fully Diluted $ 0.02
===============
The forecast assumes that the Company's debt is retired through either the
issuance of shares of the Company's equity securities or disposition of assets.
Therefore, continuing operations will be that of RALI's air cargo consolidation
and cargo air carrier services. The forecast is limited in scope to a projection
based upon the results of current operations which encompasses service being
limited to the use of the one Boeing 747-200 aircraft. The forecast does not
include an estimate of the revenue or expense which may be earned or incurred as
additional aircraft and routes are added nor does the forecast include an
estimate for the revenue or expense which may be incurred from the start of
business by B. Airways, Inc. as an operating all cargo air carrier.
Amendment to Articles of Incorporation and By-Laws.
On September 19, 1997, by an action by a majority of the shareholders of the
Company, the shareholders approved amending the Company's Articles of
Incorporation: (i) to change the par value of the Company's common stock from
fifteen cents per share to ninety cents per share; and (ii) to comport to the
non-U.S. citizen ownership and management requirements of the Federal aviation
laws. This amendment has not been finalized. Also, the Board of Directors
approved an amendment to the Company's By-Laws: (i) to change the beginning of
the Company's fiscal year from May 1 to January 1 of each calendar year; and,
(ii) to change the time for the Company's annual meeting of shareholder's from
last Thursday of October to the last Thursday of June of each calendar year.
As a result of the change in the par value of the Company's common stock the
3,711,566 shares $.15 par value common stock issued and outstanding as of April
30, 1997 and the 26,400,000 shares issued pursuant to the RALI Acquisition will
be changed into 618,594 shares and 4,400,000 shares, respectively, of $.90 par
value common stock (a 1-for-6 reverse split). This amendment will not require a
mandatory surrender and exchange of certificates, and certificates evidencing
the post-amendment shares will remain as validly issued and outstanding shares
of the common stock of the Company. The post-amendment shares will have the same
character and bear the same restrictions (if any) as the pre-amendment shares.
New ninety cent ($.90) par value shares will be issuable as a result of the
amendment and when issued in exchange for fifteen cent ($.15) par value shares
will be rounded down to the nearest whole share, thus no fractional common
shares will be issuable as a result of the amendment.
Repayment of Notes.
Subsequent to the date of closing on the RALI Acquisition the Company entered
into various agreements for the repayment of various of the Company's
obligations. On September 19, 1997 the Company entered into an agreement with
CCJ Consultants, Inc. ("CCJ"), a related party, for the liquidation of the
Company's obligations to CCJ under its promissory note and warrants to CCJ dated
August 4, 1994 by the transfer to CCJ of all of the issued and outstanding
capital stock of a wholly-owned subsidiary of the Company. Also, on September
19, 1997 the Company entered into an agreement with Mr. John E. Rayl a
shareholder, director and the Treasurer of the Company (and also an officer of
CCJ) for the issuance of 900,000 shares of the Company's fifteen cent par value
common stock in liquidation of the Company's obligations to Mr. Rayl under its
promissory note to him dated September 15, 1994. The Company also entered into
an agreement with Firestar Holdings, Ltd. for the partial liquidation of all of
the Company's obligations to Firestar for the issuance of 190,000 shares of the
Company's fifteen cent par value common stock which was valued at $19,000. On
September 23, 1997, the Company entered into an agreement with Firestar
Holdings, Ltd. to complete the liquidation of the Company's obligations for the
issuance of 2,040,000 shares of the Company's fifteen cent par value common
stock.
Subscriptions to Common Stock.
In order to provide for sufficient working capital to complete the RALI
Acquisition, in August, 1997 the Company entered into agreements with three
investment companies for their purchase of up to 4,800,000 restricted shares of
the Company's $0.15 cent par value common stock at a price of ten cents ($0.10)
per share for a total aggregate investment of $480,000 plus an agreement for
payment of certain of the Company's obligations and contingent obligations in
the maximum aggregate amount of approximately $680,000 as of July 31, 1997. At
the time of the agreements the bid price of the Company's $0.15 par value common
stock, as quoted on the OTC Bulletin Board, was thirty-one ($0.31) cents per
share.
5. Related Party Transactions
As part of the RALI Acquisition, the Company also entered into Employment
Agreements effective September 2, 1997 with Angel Munoz, Ronald Vimo and Scott
Villanueva to serve as the Company's President, Vice-President and Secretary
respectively. In addition, these individuals have replaced three of the
Company's resigning members on its Board of Directors. Each of the Employment
Agreements are similar in terms and conditions, providing for, among other
things, for a term of five years, an annual base compensation of $175,000,
$175,000 and $85,000 respectively, for annual incentive compensation in an
aggregate amount (including base compensation) of 1% of consolidated gross
revenues and for the payment of other ordinary employee benefits including
medical, disability and life insurance and business and auto expense
reimbursement.
6. Employee Stock Option Plans
The following table sets forth: (1) the number of shares of the Company's
common stock issuable at July 31, 1997 pursuant to outstanding Options; (2) the
exercise price per share; (3) the aggregate exercise price: (4) the expiration
dates; and (5) the market values of such shares at July 31, 1997, based on $0.50
per share, which is the average of the high and low ask and bid prices on the
OTC Bulletin Board at July 31, 1997.
Number of
Shares Market
Covered By Exercise Aggregate Value at
Outstanding Price Per Exercise Expiration July 31,
Plan Options Share Price Dates 1997
- --------------------------- ----------- --------- --------- ---------- --------
Incentive Stock Option Plan 30,000 $0.3125 $9,375 07/15/03 $15,000
Incentive Stock Option Plan 67,167 $0.3125 $20,990 01/06/05 $33,584
All Options are currently exercisable. However, there were no Options
exercised during the current period.
7. Earnings Per Share
For the three months ended July 31, 1997 and 1996, primary and fully diluted
earnings per share amounts, are computed based on 3,709,166 and 3,405,289
shares, the weighted average number of common shares outstanding. Included in
the weighted average number of common shares outstanding at July 31, 1996 are
387,000 shares issued upon the exercise of stock options granted under
consulting agreements. If these shares had been issued at the beginning of the
period, primary and fully diluted income per share would have been $0.13.
The employee stock options granted are not included in primary or fully
diluted earnings per share for the three months ended July 31, 1997 due to their
anti-dilutive effect and in 1996 since the dilutive effect is less than 3%.
8. Investment in Unconsolidated Affiliates
In the first fiscal quarter of 1997, the Company was a party to two
consulting agreements from which a portion of its compensation was received in
shares of the common stock of the client company. The Company recognized
$335,000 and $465,000 of income with respect to these two transactions based on
the estimated fair market value of the shares received. During the fiscal
quarter ended April 30, 1997, one of the companies ceased operations and the
business prospects of the other have declined. In addition, as part of the RALI
Acquisition the Company agreed to dispose of all of its obligations to and
investment in these companies. Accordingly, in the quarter ended April 30, 1997,
the Company wrote off all of the previously recorded income.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Company's substantial reductions in rental income, interest income,
interest expense and depreciation and amortization expense for the first three
months of fiscal 1998 compared to the same period of fiscal 1997 is a result of
a reduction, through normally scheduled payoff, in the number of lease
portfolios compared with the number of leases operative in the first nine months
of the prior fiscal year. The Company has not undertaken any new equipment lease
portfolio acquisitions in the first three months of 1998 or 1997. The change in
revenues from commissions, fees, advertising and other income can be attributed
to an increase of $800,000 for administrative and consulting fees recognized in
connection with mergers (see Note 8 - Notes to Consolidated Financial
Statements) consummated during the first fiscal quarter 1997. Marketing,
administrative and other expenses decreased approximately 38% in the three
months ended July 31, 1997 compared to the same period last year.
Liquidity and Capital Resources
During the three months ended July 31, 1997, the Company incurred a loss of
$690,570 which includes non-cash activity of $83,004 and approximately $606,000
in accrued interest expense related to leased equipment acquisition financing.
The result is a cash loss from operations of $1,566 which was funded from income
from operations, increases in accounts payable and additional unsecured short
term borrowings. Events occurring subsequent to the end of the current fiscal
quarter include the acquisition of R.A. Logistics, Inc., see Note 4 above and
the completion of agreements for repayment or provision for the liquidation of
most of the Company's current obligations. Future liquidity is anticipated to be
funded from the operations of the Company's air freight consolidation business.
From September 2, through September 24, 1997 the operation generated
approximately $1,700,000 in gross operating revenue and netted approximately
$130,000 of pre-tax operating income. The Company anticipates that it will
require additional financing and additional capital resources to fund the growth
and expansion of this business which will provided from revenues, bank and other
forms of short term borrowings which may include account receivable factoring or
other forms of secured debt financing and the sale of equity and/or debt
securities from time to time.
As part of the RALI Acquisition the Company acquired B. Airways, Inc. which
it intends to qualify as an all cargo air carrier pursuant to the applicable
federal laws and regulations. Upon qualification, this company will require
additional capital resources in order to acquire operating aircraft, parts and
equipment and to fund the pre-operating costs of adding operating aircraft
including but not limited to the costs and expenses associated with air crew
training and qualification, insurance, aircraft inspections and other costs.
Theses costs are substantial and the Company anticipates that it will require
additional capital resources which may be provided from secured debt financing
and from the sale of equity and/or debt securities from time to time. The
Company has no present commitments for such financing and there is no assurance
that financing will become available or if available will be available to the
Company on reasonably acceptable terms.
PART II
Page
Item 4. Submission of Matters to Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.95 Stock PurchaseAgreement between Dana
Credit Corporation ("Seller") and
Duluth Master Trust ("Buyer") dated
May 1, 1997 filed herewith as Exhibit
10.95 to Form 10-Q filed October 3,
1997, Commission file No. 014361.
Exhibit 10.96 Secured Recourse Note between Duluth
Master Trust and Duluth Lease, Inc.
("Co-borrowers") and Aim Financial
Corporation ("Lender")dated May 1,
1997 filed herewith as Exhibit 10.96
to Form 10-Q filed October 3, 1997,
Commission file No.014361.
Exhibit 11 Computation re: computation of
earnings per share. 13
(b) Reports on Form 8-K
None
Item 6.
(a) Exhibit 11. Earnings Per Share:
Computation of Primary Earnings Per Share. A computation of fully diluted
earnings per share is not presented as it is the same as the computation of
primary earnings per share.
Primary Earnings Per Share:
Three Months Ended July 31,
---------------------------
1997 1996
Weighted average number of common shares
outstanding 3,709,166 3,406,340
Shares assumed to be issued upon exercising
of stock purchase rights in excess
of 20% repurchase limitation - -
----------- ------------
Average number of common and common
equivalent shares 3,709,166 3,406,340
=========== ============
Net income (loss) $ (690,570) $ 455,291
Increase in interest income (net of tax)
from assumed investment in certificates of
deposit and decrease in interest expense
(net of tax) from assumed of short-term
debt with assumed stock purchase rights'
proceeds in excess of 20% repurchase
limitation - -
----------- ------------
Adjusted net income (loss) $ (690,570) $ 455,291
=========== ============
Net income (loss) per common share $ (0.19) $ 0.13
=========== ============
Fully Diluted Earnings Per Share:
Three Months Ended July 31,
---------------------------
1997 1996
Weighted average number of common shares
outstanding 3,709,166 3,406,340
Shares assumed to be issued upon exercising
of stock purchase rights in excess
of 20% repurchase limitation - -
----------- ------------
Average number of common and common
equivalent shares 3,709,166 3,406,340
=========== ============
Net income (loss) $ (690,570) $ 455,291
Increase in interest income (net of tax)
from assumed investment in certificates of
deposit and decrease in interest expense
(net of tax) from assumed of short-term
debt with assumed stock purchase rights'
proceeds in excess of 20% repurchase
limitation - -
------------ ------------
Adjusted net income (loss) $ (690,570) $ 455,291
=========== ============
Net income (loss) per common share $ (0.19) $ 0.13
=========== ============
Primary Earnings Per Share (Additional):
Three Months Ended July 31,
---------------------------
1997 1996
Weighted average number of common shares
outstanding 3,709,166 3,406,340
Shares assumed to be issued upon exercising
of stock purchase rights in excess
of 20% repurchase limitation 31,876 66,940
----------- ------------
Average number of common and common
equivalent shares 3,741,042 3,473,280
=========== ============
Net income (loss) $ (690,570) $ 455,291
Increase in interest income (net of tax)
from assumed investment in certificates of
deposit and decrease in interest expense
(net of tax) from assumed of short-term
debt with assumed stock purchase rights'
proceeds in excess of 20% repurchase
limitation - -
----------- ------------
Adjusted net income (loss) $ (690,570) $ 455,291
=========== ============
Net income (loss) per common share $ (0.18) $ 0.13
=========== ============
Fully Diluted Earnings Per Share (Additional):
Three Months Ended July 31,
---------------------------
1997 1996
Weighted average number of common shares
outstanding 3,709,166 3,406,340
Shares assumed to be issued upon exercising
of stock purchase rights in excess
of 20% repurchase limitation 36,562 122,707
----------- ------------
Average number of common and common
equivalent shares 3,745,728 3,529,047
=========== ============
Net income (loss) $ (690,570) $ 455,291
Increase in interest income (net of tax)
from assumed investment in certificates of
deposit and decrease in interest expense
(net of tax) from assumed of short-term
debt with assumed stock purchase rights'
proceeds in excess of 20% repurchase
limitation - -
----------- ------------
Adjusted net income (loss) $ (690,570) $ 455,291
=========== ============
Net income (loss) per common share $ (0.19) $ 0.13
=========== ============
Notes regarding the calculation of primary and fully diluted earnings per share
pursuant to Regulation S-K, CFR Section 229.601(b)(11):
For the three months ended July 31, 1997 shares issuable under stock purchase
rights are not are not included in primary or fully diluted earnings per share
since the inclusion is anti-dilutive and in 1996 since the dilutive effect is
less than 3%.
Included in the weighted average number of common shares at July 31, 1996 are
387,000 shares issued pursuant to exercise of stock options granted under
consulting agreements. If these shares had been issued at the beginning of the
period, primary and fully-diluted earnings per share would have been $0.13.
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.
TROPIC COMMUNICATIONS, INC.
(Registrant)
/s/ JOHN E. RAYL
Date: October 3, 1997 By:_____________________________
JOHN E. RAYL
Treasurer
(Principal Financial Officer)