U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended SEPTEMBER 30, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-4530
ASTREX, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-1930803
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
205 EXPRESS STREET, PLAINVIEW, NEW YORK 11803
(Address of principal executive offices)
(516) 433-1700
(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check mark whether the registrant has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes [X] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. As of November 8, 1996, common
shares outstanding were 5,375,363.
ASTREX, INC.
INDEX
Page No.
PART I:
Financial Statements:
Consolidated Balance Sheets
September 30, 1996 (unaudited) and March 31, 1996 1-2
Consolidated Statements of Income (unaudited)
Six Months and Three Months Ended
September 30, 1996 and 1995 3
Consolidated Statements of Cash Flows (unaudited)
Six Months Ended September 30, 1996 and 1995 4
Notes to Consolidated Financial Statements (unaudited) 5
Management's Discussion and Analysis or
Plan of Operations 6-7
PART II:
Other Information and Signatures 8
PART I - Financial Information
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 March 31, 1996
(Unaudited)
----------- --------------
(000) Omitted
Current Assets:
Cash $ 2 $ 2
Accounts receivable (net of allowance
for doubtful accounts of $86 at September
30, 1996 and $87 at March 31, 1996) 1,639 1,765
Merchandise inventories 3,425 3,934
Prepaid expenses and other
current assets 64 21
-- --
Total Current Assets 5,130 5,722
Property, plant and equipment at
cost (net of accumulated depreciation
of $215 at September 30, 1996 and
$185 at March 31, 1996) 680 692
---- --- ---- --- ---
Total Assets $5,810 $6,414
====== ======
See accompanying notes to unaudited consolidated financial statements.
-1-
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1996 March 31, 1996
(Unaudited)
----------- --------------
(000) Omitted
Current Liabilities:
Loans payable $ 1,408 $ 1,782
Accounts payable 1,208 1,650
Accrued liabilities 273 280
--- ---
Total current liabilities 2,889 3,712
----- -----
Shareholders' Equity:
Preferred Stock, Series A - issued, none -- --
Preferred Stock, Series B - issued, none -- --
Common Stock - par value $.01 per share;
authorized, 15,000,000 shares; issued,
5,375,363 at September 30, 1996 and
5,090,363 at March 31, 1996 54 51
Additional paid-in capital 3,604 3,548
Accumulated Deficit (726) (897)
---- ----
2,932 2,702
Less: Deferred Compensation (11) --
Total shareholders' equity 2,921 2,702
----- -----
Total liabilities and shareholders' equity $ 5,810 $ 6,414
======= =======
See accompanying notes to unaudited consolidated financial statements.
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ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
(000) Omitted (000) Omitted
Net sales $7,494 $6,479 $3,735 $3,245
Cost of sales 5,676 4,884 2,821 2,440
----- ----- ----- -----
Gross profit 1,818 1,595 914 805
Selling, general and
administrative expenses 1,536 1,327 764 670
----- ----- --- ---
Income from operations 282 268 150 135
Interest expense 94 117 45 61
-- --- -- --
Income before provision
for income taxes 188 151 105 74
Provision for income taxes 17 4 9 4
-- - - -
Net income $ 171 $ 147 $ 96 $ 70
====== ====== ====== ======
Per share data for the six months and three months ended September 30, 1996
and 1995 are as follows:
Weighted average number of
common shares outstanding 5,314,379 4,823,696 5,375,363 4,957,029
========= ========= ========= =========
Net income per share $0.03 $0.03 $0.02 $0.01
===== ===== ===== =====
See accompanying notes to unaudited consolidated financial statements.
-3-
ASTREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED SEPTEMBER 30,
1996 1995
---- ----
(000) Omitted
Cash Flows (Uses) From Operating Activities:
Net income $ 171 $ 147
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 30 28
Stock award compensation expense 2 12
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 126 62
(Increase) decrease in prepaid expenses and
other current assets (43) 44
Decrease in merchandise inventories 509 15
Decrease in accounts payable (442) (313)
Decrease in accrued liabilities (7) (88)
-- ---
Net cash provided by (used in) operating activities 346 (217)
--- ----
Cash flows used in investing activities:
Purchases of fixed assets (19) (22)
--- ---
Net cash used in investing activities (19) (22)
--- ---
Cash flows from financing activities:
Proceeds from issuance of common stock 47 --
(Repayments of) proceeds from loans payable, net (374) 238
---- ---
Net cash (used in) provided by financing activities (327) 238
---- ---
Net decrease in cash for the six months
ended September 30 0 (1)
Cash - beginning of period 2 3
- -
Cash - end of period $ 2 $ 2
===== =====
See accompanying notes to unaudited consolidated financial statements.
-4-
ASTREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly its financial position as of September 30,
1996. The results of operations and cash flows for the six month period ended
September 30, 1996 and 1995 are not necessarily indicative of the results to be
expected for the full year. In the opinion of management, the information in
this interim report for the six months ended September 30, 1996 and 1995
presents fairly the Company's financial position consistent with the Company's
accounting practices and principles used in interim reports. Accordingly,
certain items included in these statements are based upon best estimates,
particularly cost of goods sold. For the six month periods ended September 30,
1996 and 1995 these costs have principally been determined by utilizing
perpetual inventory records. The calculation of the actual cost of goods sold
amount is predicated upon a physical inventory taken only at the end of each
fiscal year. These financial statements, which are unaudited (except for the
Consolidated Balance Sheet as of March 31, 1996 which is audited), are based on
certain estimates and are subject to year end audit adjustments.
-5-
ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Sales increased by approximately $1,015,000, or 15.7%, for the six months and
approximately $490,000, or 15.1%, for the three months ended September 30, 1996,
from the comparable six and three month periods in 1995, respectively. This
increase is the result of the Company's improved and restructured marketing
efforts as well as (in terms of the past several years) strong military sales.
GROSS PROFIT
The gross profit percentages decreased marginally to 24.3% from 24.6% for the
six months, and to 24.5% from 24.8% for the three months ended September 30,
1996 and 1995, respectively. Despite ongoing price pressures, the Company was
able to maintain essentially stable margins.
SELLING, GENERAL & ADMINISTRATIVE
Selling, general and administrative expenses increased approximately $209,000,
or 15.7%, for the six months and approximately $94,000, or 14.0%, for the three
months ended September 30, 1996 from the comparable previous six and three month
periods in 1995. This increase is primarily due to the increase in salaries,
commissions and other costs needed to generate and support the higher sales
volume.
INTEREST EXPENSE
Interest expense decreased approximately $23,000 for the six months, and
approximately $16,000 for the three months, ended September 30, 1996, from the
previous comparable six and three month periods in 1995. This decrease is due
primarily to a lower loan balance and a reduction in the interest rate to
approximately 10.4% from approximately 12.4% for the six months and to
approximately 10.3% from approximately 12.3% for the three months ended
September 30, 1996 and 1995, respectively.
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ASTREX, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company generated $346,000 in cash from its operating activities, and
$47,000 in proceeds from the issuance of restricted common stock to employees
(pursuant to approval by the Board of Directors). The Company used this cash
primarily to paydown the Company's loan. The Company's loan agreement,
collateralized by substantially all of the Company's assets, provides for a line
of credit based on the amount of the Company's inventory and accounts
receivable, but which cannot exceed $2,500,000. The term of the loan presently
expires on July 31, 1997 at which time the Company anticipates, but cannot
assure, that it will be renewed or replaced. The Company's relations with its
secured lender are satisfactory. The Company believes that its current cash
position as well as its available credit facility are adequate for the
foreseeable future. The amount outstanding under this loan was approximately
$1,408,000 at September 30, 1996 and $1,782,000 at March 31, 1996.
-7-
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the October 14, 1996 Annual Meeting of the Company for fiscal year ending
March 31, 1996, Mr. Michael McGuire was elected as a Class I director for a term
of one year, Mr. Mark Schindler and Mr. David S. Zlatin were elected as Class II
directors for a term of two years, and Mr. Howard Amster and Mr. John C. Loring
were elected as Class III directors for a term of three years. In addition,
Sections 2 and 3 of Article II of the Company's By-Laws were amended to read as
follows:
"SECTION 2. NUMBER. THE NUMBER OF DIRECTORS SHALL BE FIVE (5) PROVIDED THAT
IN THE EVENT A THEN SERVING DIRECTOR RESIGNS, IS REMOVED, IS NOT RENOMINATED FOR
ELECTION OR IS OTHERWISE UNABLE TO SERVE, THE BOARD OF DIRECTORS SHALL NOT BE
OBLIGATED TO ELECT OR NOMINATE FOR ELECTION A REPLACEMENT."
"SECTION 3. TERM OF OFFICE AND QUALIFICATIONS. DIRECTORS NEED NOT BE
STOCKHOLDERS. DIRECTORS SHALL BE DIVIDED INTO THREE (3) CLASSES, CLASS I, CLASS
II, CLASS III. THE DIRECTORS SHALL BE EVENLY DISTRIBUTED BETWEEN THE THREE
CLASSES, BUT TO THE EXTENT THAT IS NOT POSSIBLE THEN CLASS I SHALL CONSIST OF
THE ODD NUMBER OF DIRECTORS. ALL THREE CLASSES OF DIRECTORS SHALL BE INITIALLY
ELECTED AT THE ANNUAL MEETING HELD IN CALENDAR YEAR 1996 FOR THE FOLLOWING TERMS
AND UNTIL THEIR SUCCESSORS ARE ELECTED AND SHALL HAVE QUALIFIED TO SO SERVE:
CLASS I FOR A TERM OF ONE YEAR, CLASS II FOR A TERM OF TWO YEARS, AND CLASS III
FOR A TERM OF THREE YEARS. THEREAFTER, THE TERM OF EACH DIRECTOR SHALL BE THREE
YEARS AND UNTIL A SUCCESSOR IS ELECTED AND SHALL HAVE QUALIFIED TO SO SERVE. THE
BOARD OF DIRECTORS MAY REMOVE A DIRECTOR FOR CAUSE."
The voting tally at the meeting with respect to the directors and the
proposals was as follows:
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For Against ABSTAIN & BROKER NONVOTES
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Amster 5,086,442 11,214 -
Loring 5,086,442 11,214 -
Schindler 5,086,442 11,214 -
Zlatin 5,086,442 11,214 -
McGuire 5,086,442 11,214 -
Proposal 1 4,200,493 74,414 822,749
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-8-
Item 6. Exhibits and Reports on Form 8-K.
(A) Exhibits
Previously Filed and Incorporated
Exhibit Description by reference or Filed Herewith
- ------- ----------- ------------------------------
3 (a) Certificate of Incorporation of Filed as Exhibit 3 (a) to the
Astrex, Inc. (a Delaware corporation) Form 10-K of the Company for
year ended March 31, 1993
3 (b) By-Laws of Astrex, Inc., as amended Filed herewith
27 Financial Data Schedule Filed herewith
(B) Reports on Form 8-K:
None
SIGNATURES
In accordance with the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASTREX, INC.
Date: November 11, 1996 By: /s/ Michael McGuire
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Michael McGuire
President
Chief Executive Officer
By: /s/ Irene S. Marcic
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Irene S. Marcic
Chief Financial Officer,
Vice President,
Treasurer and Secretary
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