asset to current liabilities covenants in the Company's line of credit
resulting from the loss in the first nine months of fiscal 1995. The Company
may be obliged to request a further waiver, from its principal lender, of the
covenant defaults described above at fiscal year-end even if it receives
adequate assurance of payment on the Defaulted Contract before such time.
The Company's ability to extend its line of credit prior to its expiration in
November 1995 and the Company's ability to obtain the necessary waivers of
covenants and availability formula on its line of credit will depend largely
on the results of operations for the last quarter of fiscal 1995 and early
fiscal 1996 and its business prospects at such times. Failure to obtain
sufficient new business, the required waiver, or new financing could cause the
Company to cease operations.
Management is actively pursuing various means of improving the Company's
liquidity position to allow the Company to continue operations and more
aggressively pursue its growth plan.
The Company's mortgage has a balloon payment due on March 1, 1996.
Management and the Company's bank are working on refinancing the mortgage and
Management expects to refinance the mortgage prior to the end of fiscal 1995
under acceptable terms, although there can be no assurance that the Company
will be able to do so.
Cash and working capital declined in the nine months ended April 30,
1995 as a result of the loss for the period. Accounts receivable and unbilled
accounts receivable decreased during the first nine months of fiscal 1995 as a
result of the normal course of business. The increase in inventory is
attributable, in part, to work performed in anticipation of the long-delayed
standard product order that the Company received on June 12, 1995. See
"Business Development - New Orders and Backlog". Machinery and equipment
increased primarily as a result of the Company building an AMS system for its
use in testing components and possible use in its domestic and international
remote sensing operations. See "Business Development - Growth Plan".
Short-term liabilities increased in the nine months ended April 30, 1995
primarily as a result of borrowings against the Company's line of credit.
The Company expects to invest approximately $150,000 for capital
expenditures, primarily for equipment, during fiscal 1995. The Company also
expects fiscal 1995 internal research and development costs to remain above
fiscal 1994 levels as additional products are developed and introduced. See
"Business Development - Growth Plan". These expenditures are vital to the
future growth of the Company, and are expected to be funded by working capital
and the Company's line of credit.
PART II - OTHER INFORMATION
All items omitted are not applicable or the answers thereto are negative.
Item 6(a): Exhibits
Exhibit No. Description
11.01 Computation of earnings per share
27 Financial Data Schedule (EDGAR filing only)
Item 6(b): No reports on Form 8-K were filed during the period.