One reason there wasn't any reaction to the profitable quarter is becouse tels didn't have a news release to the fact. At least I can't find any. Maybe a local paper in Utah somewhere. This is cut from their 10Q required filing. Tony
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
COMPARED TO JUNE 30, 1996
Consolidated net sales for the six months ended June 30, 1997,
decreased by 15% to $2,997,403 when compared to $3,531,777 of net sales for the
six months of 1996. Consolidated net sales of $1,628,804 decreased by 4% when
compared to the second quarter of 1996 sales of $1,692,771. The decrease in
sales is due primarily to a decline in revenue from the manufacturing division
where sales decreased 27% for the first half of 1997, when compared with the
same period of 1996. This decrease in sales in the manufacturing division was
offset somewhat by an increase in sales in the telephone call accounting
division where sales increased by 15% for the six months ending June 30, 1997,
when compared to the same period in 1996. This increase in telephone call
accounting sales is due to new products released in early 1997, increased sales
from the Company's dealer distribution channel, and through national accounts.
Gross profit for the second quarter of 1997, decreased to $802,210, a
reduction of $37,956 when compared to gross profit for the second quarter of
1996 of $840,166. The gross profit margin as a percentage of sales was 49% for
the second quarter of 1997, compared to 50% for the second quarter of 1996. The
gross profit margin for the first half of 1997 improved to 48% when compared to
43% for the first half of 1996. This change is due to increased sales levels of
telephone call accounting products and reductions in manufacturing costs at HTI.
For the first half of 1997, the Company's sales of telephone call accounting
products increased from 31% of total sales in 1996, to 42% of total sales in
1997. The telephone call accounting products have traditionally had a higher
gross profit margin than products and service sales in the manufacturing sector.
Total research and development expenses including amortization of
previously capitalized development costs for the second quarter and six months
of 1997 were $44,040 and $70,444 respectively, compared to $23,246 and $67,352
for the same periods in 1996. The Company is continuing its research and
development efforts on products which bring together technological advances in
the telecommunications industry and believes that it will be necessary to
increase its level of research and development in 1997 to take advantage of
technology changes which are expected to develop.
TELS Corporation
Selling, general and administrative expenses were $717,164 for the
second quarter of 1997, compared to $820,112 for the second quarter of 1996.
This decrease of $102,948, or 13%, in 1997, is mainly due to continuing expense
reductions implemented by management of the Company. As a percentage of net
sales, administrative expenses were 44% for the second quarter of 1997, and 48%
for the second quarter of 1996. For the six months ending June 30, 1997,
selling, general and administrative expenses were $1,422,883 compared to
$1,546,278 for 1996. The reductions in administrative expenses in the six months
ending June 30, 1997, were offset somewhat by increased selling expenses
incurred to introduce the WIN-SENSETM and INN-FORMR Express telephone call
accounting products begun in late 1996 and continuing into 1997. Management of
the Company is continuing its efforts to reduce administrative expenses until
such time that increased sales revenues warrant any expansion and/or growth.
The Company reported consolidated net income from operations for the
second quarter of 1997 of $21,104. This is a significant improvement when
compared to the second quarter net loss of $35,214 for 1996. For the six months
ending June 30, 1997, the Company incurred a net loss of $62,327 compared to a
net loss of $102,889 for the same period of 1996. This favorable change in net
loss can be attributed to the increased sales levels of telecommunications
products and lower manufacturing and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company reported current assets of $2,081,929,
and current liabilities of $1,588,375, resulting in net working capital of
$493,554. This is a decrease of $14,113 when compared to net working capital of
$507,667 at December 31, 1996. Working capital provided by operating and
financing activities was used to purchase equipment of $23,196, for capitalized
software development costs of $78,850, and to reduce accounts payable of
$30,495. The Company increased its borrowing under its line of credit by
$116,416, and reduced long term debt by $59,564. The Company was able to replace
its line of credit facility by entering into a new inventory and accounts
receivable financing agreement with a new lender on July 1, 1997. The agreement
is for twenty four months, with interest at prime plus 3%. Management of the
Company anticipates that additional financing through debt and/or equity will be
needed to fund sales growth, operations, future acquisitions, and final
development and marketing of new products under consideration. |
