UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2003
Commission file number 0-12227
Sutron Corporation
-------------------------------
(Exact name of registrant as specified in its charter.)
Virginia 54-1006352
-------------- -------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation organization)
21300 Ridgetop Circle, Sterling Virginia 20166
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(703) 406-2800
--------------
(Registrant's telephone number, including area code)
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. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $.01 Par Value - 4,289,551 shares of as of June 30, 2003.
PART I. - FINANCIAL INFORMATION
SUTRON CORPORATION
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2003 2002
___________ ___________
Assets
Current Assets:
Cash $ 119,980 $ 401,740
Accounts receivables 1,526,732 1,814,269
Costs and estimated earnings in excess
of billings on contracts in process 755,714 -
Inventory 2,410,194 2,028,985
Prepaid items and other 158,331 182,774
Deferred income taxes 319,199 195,000
___________ ___________
Total Current Asset $5,290,150 $4,622,768
Property, Plant, and Equipment
Cost 2,646,572 2,567,421
Accumulated depreciation (2,036,819) (1,929,419)
___________ ___________
Net Property, Plant and Equipment 609,753 638,002
Income taxes receivable 151,000 151,000
Other 21,689 21,689
___________ __________
TOTAL ASSETS $6,072,592 $5,433,459
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 893,686 $ 483,652
Accrued payroll 137,771 157,196
Accrued expenses 1,040,420 590,798
Line of credit - -
Current maturities of long-term notes 93,204 93,204
__________ __________
Total Current Liabilities $2,165,081 $1,324,850
Long-term liabilities:
Long-term notes payable 69,503 116,105
Deferred income taxes 142,000 142,000
__________ __________
Total liabilities 2,376,584 1,582,955
Stockholders' Equity:
Common stock, $.01 par value, 42,896 42,896
Additional paid in capital 2,306,655 2,306,655
Retained Earnings 1,346,457 1,500,953
___________ __________
Total Stockholders' Equity 3,696,008 3,850,504
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,072,592 $5,433,459
See Accompanying Notes to Financial Statements
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
June 30,
2003 2002
___________ ___________
Revenues $2,818,796 $2,284,007
Cost of Goods Sold 1,826,539 1,479,648
___________ __________
Gross Profit 992,257 804,359
Research and Development Expenses 267,077 399,490
Selling, General, and
Administrative Expenses 542,255 471,468
___________ ___________
Income (Loss) from Operations 182,925 (66,599)
Interest Expense 4,233 11,191
Income (Loss) before Provision ____________ ___________
for Income Taxes 178,692 (77,790)
Provisions for Income Taxes (50,000) (45,000)
____________ ___________
Net Income $128,692 $( 32,790)
Net Income per Common Share $.03 $(.01)
Weighted Average Number
of Common Shares 4,289,551 4,289,551
See Accompanying Notes to Financial Statements
SUTRON CORPORTION
STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended
June 30,
2003 2002
___________ ___________
Revenues $5,078,597 $3,586,535
Cost of Goods Sold 3,593,408 2,330,488
___________ __________
Gross Profit 1,485,190 1,256,047
Research and Development Expenses 584,014 725,919
Selling, General, and
Administrative Expenses 1,193,150 1,033,806
___________ ___________
Income (Loss) from Operations (291,974) (503,678)
Other Expense - -
Interest Expense 8,522 22,688
Income (Loss) before Provision ____________ ___________
for Income Taxes (300,496) (526,366)
Provisions for Income Taxes (146,000) (227,000)
____________ ___________
Net Income $(154,496) $(299,366)
Net Income per Common Share $(.04) $(.07)
Weighted Average Number
of Common Shares 4,289,551 4,289,551
See Accompanying Notes to Financial Statements
SUTRON CORPORTION
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
2003 2002
___________ __________
Cash Flows from Operating Activities:
Net income (loss) $ (154,496) $ (299,366)
Depreciation and amortization 107,400 99,996
(Increase) Decrease in:
Accounts receivables 287,537 531,562
Costs and estimated earnings in excess
of billings on contracts in process (755,714) -
Inventory (381,209) (409,840)
Prepaid items and other assets 24,443 (111,185)
Deferred income taxes (124,199) -
Increase (Decrease) in:
Accounts payable 410,034 19,898
Accrued expenses 430,197 (146,776)
__________ _______
Net Cash Provided by Operating Activities (156,007) (315,711)
Cash Flows from Investing Activities:
Capital expenditures (79,151) (38,268)
________ ______
Net Cash Used in Investing Activities (79,151) (38,268)
Cash Flows from Financing Activities:
Proceeds from advances on line of credit - 453,986
Proceeds from term note - -
Payments on Term notes payable (46,602) (59,102)
Purchase of Treasury Stock - -
__________ _______
Net Cash (Used) by Financing Activities (46,602) 394,884
____________ _________
Net Increase (Decrease) in Cash (281,760) 40,905
Cash and Cash Equivalents, January 1 401,740 102,976
___________ _________
Cash and Cash Equivalents, June 30 $ 119,980 $ 143,881
See Accompanying Notes to Financial Statements
SUTRON CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
1. Basis of Presentation
The financial statements for the six months ended June 30, 2003
and 2002 were prepared from the books and records of the company.
Management believes that all adjustments have been made to the
financial statements to make a fair presentation of the financial
condition of the company as of June 30, 2003 and 2002. The results
of the six months are not indicative of a full year of operation
for the Company.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's December 31, 2002 audited financial
statements.
2. Earnings Per Share
The Company has adopted Statement of Financial Accounting
Standards ("SFAS") No. 128 which establishes standards for
computing and presenting earnings per share (EPS) for entities
with publicly held common stock. The standard requires
presentation of two categories of earning per share, basic EPS
and diluted EPS. Basic EPS excludes dilution and is computed
by dividing income available to common stockholders by the
weighted-average number of common shares outstanding for
the year. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings
of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Three months ended June 30, 2003 Compared to 2002
Net Revenues. The Company's revenues for the three months
ended June 30, 2003 increased 23.4% to $2,818,796 from $2,284,007
in 2002 due to increased sales of standard products, systems and
services. The Hydrological Services Division grew its revenue
to $189,403 from $36,475 in 2002 due to increased contract backlog.
Gross Profit. Gross profit for 2003 increased 23.4% to $992,257 from
$804,359 in 2002. Gross margin as a percentage of revenues
was 35.2% for both quarters.
Selling, General And Administrative. Selling, general
and administrative expenses increased to $542,255 in 2003
from $471,468 in 2002, an increase of $70,787 or 15%. The
increase was due to increased sales commissions and systems and
Hydrological Services Division selling expenses. Due to the
completion of new systems software, XConnect, resources were shifted
from R&D to sales resuting in the increase in systems selling
expenses.
Research And Development. Research and development expenses
were $267,077 in 2003 compared with $399,490 in 2002, a decrease
of $132,413 or 33%. Due to the completion of new systems software,
XConnect, resources were shifted from R&D to sales resuting in the
decrease in product development expenses. Product
development expenditures were primarily focused on software
enhancements to SatLink and the Xpert and XLite
dataloggers.
Interest Expenses. Interest expenses decreased to $4,233 in 2003
from $11,191 in 2002.
Six months ended June 30, 2003 Compared to 2002
Revenues. The Company's revenues for the six months ended
June 30, 2003 increased 41.8% to $5,078,597 from revenues of
$3,586,535 in 2002 due to increased sales of standard products to
approximately $2,970,000 from approximately $2,773,000 in 2002,
increased sales of systems to approximately $1,876,910 from
approximately $773,000 in 2002 and increased Hydrological Services
Division revenues to approximately $231,000 from
approximately $36,000 in 2002. Sales of the dataloggers were
up approximately $339,000 while sensor and ancillary product sales
decreased approximately $141,000 accounting for the increase
in standard products. Systems and Hydrological Services
Division revenues increased as a result of increased projects
and contract awards.
The Company booked orders during the first six
months of 2003 totalling approximately $5,212,000 compared
with $6,494,000 in 2002. Orders for systems and services
were up during the first six months and standard product orders
were down. The result was a decline in the Company's backlog
to approximately $2,933,000 at June 30, 2003 as compared to
$4,466,000 at June 30, 2002.
Gross Profit. Gross profit for 2003 increased to $1,485,190
from $1,256,047 in 2002. Gross margin as a percentage of
revenues for 2003 decreased to 29% as compared to 35%
in 2002. The decrease in the Company's gross margin as
a percentage of sales is attributed to manufacturing overruns
that the Company has experienced in the production of the
SatLink-G312 satellite transmitter, increased warranty costs
associated with the SatLink and inventory revaluation costs.
Also the gross margins achieved on two projects in India
and one in Mexico were not significant as these projects
were all bid at reduced margins but accounted for
revenue of approximately $614,000.
Selling, General and Administrative. Selling, general and
administrative expenses increased to $1,193,150 in 2003 from
$1,033,806 in 2002, an increase of $159,344 due to increased
sales commissions and systems and Hydrological Services Division
selling expenses. Due to the completion of new systems
software, XConnect, resources were shifted from R&D to sales
that also increased systems selling expenses.
Research and Development. Research and development
expenses decreased $141,905 to $584,014 in 2003 from $725,919
in 2002. Due to the completion of new systems software,
XConnect, resources were shifted from R&D to sales resuting in
the decrease in product development expenses. Product
development expenditures were primarily focused on software
enhancements to SatLink and the Xpert and XLite
dataloggers.
Interest Expenses. Interest expenses decreased to $8,522 in 2003
from $22,688 in 2002.
Backlog. The Company's backlog of orders at June 30, 2003 was
approximately $2,933,000 as compared to $4,466,000 at June 30, 2002.
The Company anticipates that 64% of its June backlog will be shipped
in 2003.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $119,980 at June 30, 2003,
compared to $401,740 at December 31, 2002.
The ratio of current assets to current liabilities was 2.4:1 as of
June 30, 2003, compared to 3.5:1 as of December 31, 2002. Working
capital decreased to $3,125,070 at the end of the second quarter of
fiscal 2003 compared to $3,297,918 at the end of fiscal 2002.
The Company has a revolving credit facility of $500,000 that
expires on June 12, 2004. Management believes that its existing
cash resources, cash flow from operations and short-term borrowings
on the existing line of credit and anticipated future line of credit
will provide adequate financial resources for supporting operations
during fiscal 2003.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 14, 2003, an Annual Meeting of Shareholders
of Sutron Corporation was held. Directors elected at the
meeting were Raul S. McQuivey, Thomas N. Keefer,
Daniel W. Farrell, Sidney C. Hooper and Robert F. Robrts, Jr.
Thompson, Greenspon & Co., P.C. were appointed as
independent accountants for 2003. The election of directors
and the appointment of the independent accountants were
the only matters voted upon at the meeting. The number of
shares eligible to vote at the meeting were 4,289,551. The
results of the voting on these three matters are shown below.
1. Election of Directors
Name Votes For Votes Withheld
Raul S. McQuivey 3,855,815 191,348
Thomas N. Keefer 3,855,815 191,348
Daniel W. Farrell 3,855,815 191,348
Sidney C. Hooper 3,855,815 191,348
2. Appointment of Thompson, Greenspon & Co., P.C.
as Independent Accountants.
For Against Abstain
3,855,935 191,228 --
Item 6. Exhibits and Reports on Form 8-K
(A) No reports on Form 8-K were filed or required to be filed
during the quarter ended June 30, 2003.
(B) The following exhibits are included as part of this report:
99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
Item 14. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Based on their
evaluation of the Companys disclosure controls and procedures
(as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934) as of a date within 90 days of the filing date
of this Quarterly Report on Form 10-QSB the Companys chief executive
officer and chief financial officer have concluded that the Companys
disclosure controls and procedures are designed to ensure that
information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified
in the SEC's rules and forms and are operating in an effective manner.
(b) Changes in internal controls. There were no significant changes
in the Companys internal controls or in other factors that could
significantly affect these controls subsequent to the date of their
most recent evaluation.
SUTRON CORPORATION
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Sutron Corporation
(Registrant)
August 11, 2003 /s/Raul S. McQuivey
Date Raul S. McQuviey
Principal Executive Officer
August11, 2003 /s/Sidney C. Hooper
Date Sidney C. Hooper
Principal Accounting Officer
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Raul S. McQuivey, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of
Sutron Corporation;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to
the period covered by this quaterly report;
3. Based on my knowledge, the financial statements, and
other financial information included in this quaterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have: a) designed
such disclosure controls and procedures to ensure that
material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period
in which this annual report is being prepared; b) evaluated
the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of the registrant
board of directors (or persons performing the equivalent
functions): a) all significant deficiencies in the design
or operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have identified for
the registrants auditors any material weaknesses in internal
controls; and b) any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrants internal controls; and
6. The registrants other certifying officers and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: August 11, 2003
By /s/ Raul S. McQuivey Raul S. McQuviey, Chairman of
the Board of Directors
and President
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sidney C. Hooper, certify that:
1. I have reviewed this quaterly report on Form 10-QSB of
Sutron Corporation;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
made, in light of the circumstances under which such
statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and
other financial information included in this quaterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have: a) designed
such disclosure controls and procedures to ensure that
material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period
in which this annual report is being prepared; b) evaluated
the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of the registrant
board of directors (or persons performing the equivalent
functions): a) all significant deficiencies in the design
or operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have identified for
the registrants auditors any material weaknesses in internal
controls; and b) any fraud, whether or not material, that
involves management or other employees who have a significant
role in the registrants internal controls; and
6. The registrants other certifying officers and I have
indicated in this quarterly report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: August 11, 2003
By /s/ Sidney C. Hooper Sidney C. Hooper,
Director and
Chief Accounting
Officer
Exhibit 11
Sutron Corporation
Computation of Per Share Earnings
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
__________ _________ _________ _________
Basic EPS
Average shares outstanding 4,289,551 4,289,551 4,289,551 4,289,551
Net Income $128,692 $(32,790) $(154,496) $(299,366)
Net Income per common share $.03 $(.01) $(.04) $(.07)
Dilutive EPS
Average shares outstanding 4,289,551 4,289,551 4,289,551 4,289,551
Effect of dilutive securities 77,857 - 98,769 - -
Total average shares outstanding 4,367,408 4,289,551 4,388,320 4,289,551
Net earnings $ 128,692 $ (32,790) $(154,496) $(299,366)
Net income per diluted share $.03 $(.01) $(.04) $(.07)