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Tuesday, December 27, 2005

Teltronics, Inc (TELT) quarterlies

First Quarter 2005
Share count: 7,874,539

Balance Sheet
Cash decreased almost in half
AR held steady
Inventories went up moderately
Other current assets increased

Current ratio is 0.79
Shareholder deficit is $6.5 million
Total assets are $16.9 million

Income Statement
Sales decreased to $6.6 million from $8.8 million
The decrease [in sales] resulted primarily from a sales lag on a product enhancement introduced in late 2004 and a shift of $500[K] from the first quarter to the second quarter of 2005 as the result of a particular government contract put on hold. This order was reinstated in May 2005.
Gross margins at 43.0% (down from 44.8%, due to sales mix)
SG&A down (but mostly due to a $205K decrease in provision for doubtful accounts due to specific collections made)
There was a $129K increase in compensation.
R&D up by 17% due to new staff at the Atlanta location.

Small loss from operations, greater than the loss in Q1 2004.
Gain on sale of abandoned technology (no details) larger than the operational loss.
Interest payments were enough to make net earnings negative (but were down due to decrease in interest rate to Harris, the patent guys).

Net loss of ($237K) vs loss of ($67K) in Q1 2004.
Dividends to Preferred Series B and C shareholders: $159K

Net loss to common shareholders: ($363K) vs ($220K) in Q1 2004.
also small foreign currency loss of $24K

Cash Flow Statement
Cash flow from ops was ($424K) no details
Cash flow from investing was $353K (which means capex was about $142K)
Paid down $605K of [related party] debt.

1.7 million anti-dilutive options (apparently this is all of them)
1.2 million anti-dilutive warrants (apparently this is all of them)
So assume a fully diluted share count of 10.8 million shares.

All categories of inventory are up.

Credit facility amended, matures Mar 31, 2006, prime plus 2% or 3% depending on results, secured by all assets. Limit is based on formulas. Limit was now only $95K (had been $5.5 million).

Still in arrears on the preferred stock (B and C).
Still in arrears on note payable to Tri-Link of $1,080.

Second Quarter 2005
Share count: unchanged from Q1

Balance Sheet
Cash is way up
AR is also up
Inventories up a bit
Other current assets up a bit

Current ratio is down to 0.63
Shareholder deficit is down to ($5.4 million)
Total assets are $20 million

Income Statement
Revenues are actually slightly higher than the prior year... but this is because a lot of revenue from Q1 was pushed into Q2.
The three month increase is primarily the result of a shift in customer demands from the first quarter to the second quarter. The decrease in sales for the six months ending June 30, 2005 is primarily attributable to the ongoing downturn in the Intelligent Systems Management market as customers switch from the Time Division Multiplexing technology to the Internet Protocol technology.
The Q3 report shows more of this same thing. This is a company fighting against what is probably a long term trend. TCP/IP is not something new, it's a long term trend. I was hoping to find some business operations within this company that would benefit greatly from ongoing trends, but I don't see it. Maybe it will emerge in the future, so it's worth following. But for now, I'm stopping.
worth following

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