ANTP Phazar Corp (MM)

PHAZAR CORP, (NASDAQ: ANTP) designs, manufactures and markets antennas, towers, support structures, masts and communication accessories worldwide. Today, PHAZAR CORP announces the unaudited results of operations for the three and nine month periods ended March 31, 2013.

Third Quarter Fiscal Year 2013

PHAZAR CORP’s consolidated sales from operations were $1,643,108 for the quarter ended March 31, 2013 compared to sales of $1,485,107 for the quarter ended March 31, 2012. The Company’s increase in revenues of $158,001, or 11%, is attributed to a 12% increase in the commercial wireless product line for the comparative quarters. Cost of sales and contracts from operations were $956,228 for the quarter ended March 31, 2013, compared to $651,211 for the quarter ended March 31, 2012, up $305,017, or 47% attributable to higher level of sales and an increase in plant utilization overhead charged to cost of goods sold. Gross profit margin for the quarter, at 42% is down fourteen basis points from the 56% gross profit margin reported in the comparable period last year.

Selling, general and administration expenses were down 41% for the quarter ended March 31, 2013, to $659,296 from $1,113,677 in the prior year, reflecting an increase in plant utilization overhead charged to cost of goods sold, lower level of wages and stock compensation expense partially offset by higher level of legal and professional costs for the comparative quarters. Discretionary product development spending for the quarter ended March 31, 2013 was $172,553, or 11% of sales, compared to $171,075, or 12% of sales for the comparable period last year.

The Company recorded a net loss of $168,196, or $(0.07) per share for the three month period ended March 31, 2013 compared to a net loss of $286,471 or $(0.12) per share for the comparable period in the prior year.

Nine Month Period Ending March 31, 2013

Consolidated sales from operations for PHAZAR CORP were $4,298,074 for the nine months ended March 31, 2013 compared to $4,992,692 for the nine months ended March 31, 2012. The Company’s sales fell by $694,618, or 14% attributable to a $1,116,454 non-recurring antenna shipment to EID-Portugal in fiscal year 2012 partially offset by an upturn in commercial wireless, shipboard and safety climb product lines during fiscal year 2013.

Costs of sales and contracts from operations were $3,207,190 for the nine months ended March 31, 2013 compared to $2,703,592 for the nine months ended March 3, 2012, up $503,598, or 19%. The increase is attributed to the $600,000 slow moving inventory reserve recorded in the first quarter of fiscal year 2013 and an increase in plant utilization overhead offset by a decline in revenues over the nine month period. The gross profit margin for the nine month period ended March 31, 2013, at 25% was down twenty one basis points compared to the gross profit margin of 46% for the same period in the prior year.

Selling, general and administration expenses of $1,790,844 are down $787,791, or 31% for the nine months ended March 31, 2013 compared to $2,578,635 for the nine month period ended March 31, 2012. The $787,791 decline related to an increase in plant utilization overhead charged to cost of goods sold, along with a lower level of wages and stock compensation expense partially offset by an increase in legal and professional fees for the nine month period ended March 31, 2013 compared to the same nine month period in prior year. The impairment of note receivable reflects a $1,547,513 impairment charge on the Tracciare, Inc. note receivable.

Discretionary product development spending for the nine month period ended March 31, 2013 was $531,525, or 12% of sales, compared to $397,935, or 8% of sales for the comparable period last year. Year over year there is an increase of $133,590 in discretionary product development spending. The increase represents continued product development for the commercial wireless product line.

The Company recorded a net loss of $3,187,683, or $(1.37) per share for the nine month period ended March 31, 2013 compared to a net loss of $402,255, or $(0.17) per share for the comparable period in the prior year.

Backlog of Orders

The Company’s backlog of orders on March 31, 2013, totaled $2,223,663, up 53% compared to backlog of $1,449,250 at March 31, 2012 and up 49% from June 30, 2012. Incoming orders for the nine month period ended March 31, 2013 totaled $5,047,991 versus $4,190,148 for the nine month period ended March 31, 2012, an increase of 20% year over year.

Cash and Cash Equivalents

Cash and cash equivalents of $683,499 at March 31, 2013 are up $154,623, or 29% compared to a balance of $528,876 as of June 30, 2012. The primary components of the increase in cash at the end of the period consists of $500,000 of cash provided from the funding of a promissory note from QAR Industries, Inc. offset by $272,025 of cash used in operating activities, consisting of a $277,739 increase in inventories (net of slow moving reserve) associated with work in process jobs scheduled to ship later in the fiscal year and a $138,489 decrease in accounts payable.

Financing Activities

There was $500,000 of financing activities from the funding of the promissory note from QAR Industries, Inc. during the nine month periods ended March 31, 2013. At March 31, 2013 and 2012, PHAZAR CORP had no long-term debt outstanding.

Expected Going Private Transaction and Capital Liquidity

The Company has entered into an agreement by which it will go private no later than July 31, 2013, provided it receives shareholder approval. The Company currently anticipates that it has adequate operating capital through the close of the transaction. Should the Company experience unexpected operational difficulties or delays in the transaction closing or if the transaction is not consummated for any reason, the Company will most likely need additional capital, including capital to repay the $500,000 loan received from QAR Industries, Inc. which carries a maturity date of July 31, 2013. There is no guarantee that the Company will be able to procure additional capital and if it is successful, it is likely that such capital will be highly dilutive to current shareholders.

More information and analysis of PHAZAR CORP’s financial results will be provided in the management discussion and analysis of financial condition and results of operations in the Form 10-Q for the third quarter ended March 31, 2013, estimated to be filed with the Securities and Exchange Commission on or about April 22, 2013.

The Form 10-Q will also be available at the SEC’s website at www.sec.gov and PHAZAR CORP’s website at www.phazarcorp.com.

Product information is available at www.antennaproducts.com and www.phazar.com.

The common stock of PHAZAR CORP is listed on the NASDAQ Capital Market under the trading symbol “ANTP”. This press release contains forward-looking information within the meaning of Section 29A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performances and underlying assumption and other statements, which are other than statements of historical facts. Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties, which could cause actual results, or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties, but there can be no assurance that management’s expectations, beliefs or projections will result, or be achieved, or accomplished.

  PHAZAR CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS                       March 31, 2013

(Unaudited)

      June 30, 2012 CURRENT ASSETS Cash and cash equivalents $ 683,499 $ 528,876 Accounts receivable: Trade, net of allowance for doubtful accounts of $0 as of March 31, 2013 and June 30, 2012 708,147 880,342 Inventories (net of slow moving reserve) 2,054,166 2,376,427 Note receivable (net of impairment reserve) - 1,477,161 Prepaid expenses and other assets 50,282 95,231 Income taxes receivable 29,321 29,321 Deferred income taxes         -           211,674     Total current assets 3,525,415 5,599,032   Property and equipment, net 899,015 997,426 Long-term deferred income tax                   301,547    

TOTAL ASSETS

      $ 4,424,430         $ 6,898,005       CURRENT LIABILITIES Accounts payable $ 136,139 $ 274,628 Accrued liabilities 320,869 300,637 Note payable – QAR Industries, Inc. 500,000 - Deferred revenues 262,341 19,619 Liabilities held for discontinued operations         114,571           114,571     Total current liabilities $ 1,333,920 $ 709,455   TOTAL LIABILITIES       $ 1,333,920         $ 709,455       COMMITMENTS AND CONTINGENCIES   SHAREHOLDERS’ EQUITY Preferred Stock, $1 par, 2,000,000 shares authorized, none issued or outstanding, attributes to be determined when issued - -   Common stock, $0.01 par, 6,000,000 shares authorized 2,330,337 issued and outstanding on March 31, 2013 and 2,391,628

issued June 30, 2012

23,304 23,917  

Additional paid in capital

4,610,138 4,735,800

Treasury stock, at cost, 0 and 74,691 shares on March 31, 2013

and June 30, 2012, respectively -

(215,918

)

 

Retained earnings (accumulated deficit)        

(1,542,932

)

        1,644,751     Total shareholders’ equity         3,090,510           6,188,550       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 4,424,430         $ 6,898,005         PHAZAR CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS             Three Months Ended Nine Months Ended March 31, March 31, 2013       2012   2013       2012         (Unaudited)       (Unaudited) Sales and contract revenues $ 1,643,108 $ 1,485,107 $ 4,298,074 $ 4,992,692 Cost of sales and contracts       956,228           651,211           3,207,190           2,703,592  

Gross profit

686,880 833,896 1,090,884 2,289,100   Selling, general and administration expenses 659,296 1,113,677 1,790,844 2,578,635 Impairment of note receivable 31,175 - 1,547,513 - Research and development costs           172,553           171,075           531,525           397,935   Total operating expenses 863,024 1,284,752 3,869,882 2,976,570   Operating loss (176,144 ) (450,856 ) (2,778,998 ) (687,470 )   Other income Interest income (expense) (815 ) 23,759 50,952 91,636 Other income       8,763           8,622           53,793           19,973   Total other income 7,948 32,381 104,745 111,609   Loss from operations before income taxes (168,196 ) (418,475 ) (2,674,253 ) (575,861 )   Income tax expense (benefit)       -           (142,282 )         513,430           (195,793 )   Net loss before discontinued operations (168,196 ) (276,193 ) (3,187,683 ) (380,068 )   Loss from discontinued operations - (15,572 ) - (33,616 ) Income tax benefit from discontinued operations       -           5,294           -           11,429   Net loss from discontinued operations - (10,278 ) - (22,187 )  

Net loss

        $ (168,196 )       $ (286,471 )       $ (3,187,683 )       $ (402,255 )   Basic loss per common share Continuing operations $ (0.07 ) $ (0.12 ) $ (1.37 ) $ (0.16 ) Discontinued operations           -           -           -           (0.01 ) Net loss $ (0.07 ) $ (0.12 ) $ (1.37 ) $ (0.17 )   Diluted loss per common share Continuing operations $ (0.07 ) $ (0.12 ) $ (1.37 ) $ (0.16 ) Discontinued operations           -           -           -           (0.01 ) Net loss $ (0.07 ) $ (0.12 ) $ (1.37 ) $ (0.17 )   Basic weighted average of common shares outstanding 2,325,795 2,315,080 2,321,983 2,313,264 Diluted weighted average of common shares outstanding 2,325,795 2,315,080 2,321,983 2,313,264     PHAZAR CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS           Nine Months Ended           March 31, 2013

(Unaudited)

      March 31, 2012

(Unaudited)

      CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,187,683 ) $ (402,255 ) Adjustments to reconcile net loss to net cash

provided by (used in) operating activities:

Depreciation 98,411 97,040 Provision for slow moving inventory 600,000 - Impairment of note receivable 1,547,513 - Loss from discontinued operations - 22,187 Stock based compensation 89,643 206,808 Deferred federal income tax 513,221 (178,260 ) Changes in operating assets and liabilities: Accounts receivable 172,195 96,928 Inventories (277,739 ) 56,466 Prepaid expenses and other assets 44,949 73,544 Income taxes receivable - 207,045   Accounts payable (138,489 ) (22,168 ) Accrued liabilities 20,232 98,117 Deferred revenues 242,722 2,265 Net cash used in discontinued operations           -           (85,676 ) Net cash provided by (used in) operating activities (275,025 ) 172,041   CASH FLOWS FROM INVESTING ACTIVITIES: Funding of note receivable (70,352 ) (399,369 ) Purchase of property and equipment           -           (84,560 ) Net cash used in investing activities (70,352 ) (483,929 )   CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from QAR Industries, Inc. note payable           500,000           -   Net cash provided by financing activities 500,000 -   Net increase (decrease) in cash and cash equivalents 154,623 (311,888 )   CASH AND CASH EQUIVALENTS, beginning of period           528,876           1,169,318  

CASH AND CASH EQUIVALENTS, end of period

        $ 683,499         $ 857,430