UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 1, 2012
OR
¨
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________________to_____________________________
Commission file No. 0-11003
WEGENER CORPORATION
(Exact name of registrant as specified in
its charter)
|
Delaware
|
|
81–0371341
|
|
(State or other jurisdiction
|
|
(I.R.S. Employer
|
|
of incorporation or organization)
|
|
Identification No.)
|
|
|
|
|
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11350 Technology Circle, Johns Creek, Georgia
|
|
30097-1502
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant's telephone number, including
area code:
(770) 623-0096
Registrant’s web site: HTTP://WWW.WEGENER.COM
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 by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes
x
No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting
company
x
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).
Yes
¨
No
x
Indicate the number of shares outstanding
of each of the issuer’s classes of common stock, as of the latest practicable date:
|
Common Stock, $.01 par value
|
13,147,051 Shares
|
|
|
Class
|
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Outstanding at July 13, 2012
|
|
WEGENER CORPORATION
Form 10-Q For the Quarter Ended June
1, 2012
INDEX
PART I. Financial Information
|
Item 1.
|
Financial Statements
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|
|
|
|
|
|
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Introduction
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3
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|
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|
|
|
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Consolidated Statements of Operations
|
|
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(Unaudited) - Three and Nine Months Ended
|
|
|
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June 1, 2012 and June 3, 2011
|
4
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|
|
|
|
|
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Consolidated Balance Sheets – June 1,
|
|
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|
2012 (Unaudited) and September 2, 2011
|
5
|
|
|
|
|
|
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Consolidated Statements of Capital Deficit
|
|
|
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(Unaudited) - Nine Months Ended June 1,
|
|
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2012 and June 3, 2011
|
6
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|
|
|
|
|
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Consolidated Statements of Cash Flows
|
|
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(Unaudited) - Nine Months Ended June 1,
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|
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2012 and June 3, 2011
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7
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|
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Notes to Consolidated Financial
|
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Statements (Unaudited)
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8
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|
|
|
|
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Item 2.
|
Management's Discussion and Analysis of Financial
|
|
|
|
Condition and Results of Operations
|
14
|
|
Item 4.
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Controls and Procedures
|
20
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PART II. Other Information
|
Item 1A.
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Risk Factors
|
21
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
21
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Item 6.
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Exhibits
|
22
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|
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Signatures
|
23
|
PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements
INTRODUCTION - CONSOLIDATED FINANCIAL
STATEMENTS
The consolidated financial statements of
Wegener
ä
Corporation (the “Company”, “Wegener”, “we”,
“our” or “us”) included herein have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. The consolidated statements of operations for the three and nine months ended June 1, 2012, and June 3,
2011; the consolidated balance sheet as of June 1, 2012; the consolidated statements of (capital deficit) shareholders' equity
as of June 1, 2012, and June 3, 2011; and the consolidated statements of cash flows for the nine months ended June 1, 2012, and
June 3, 2011; have been prepared without audit. The consolidated balance sheet as of September 2, 2011, has been audited by independent
registered public accountants. Certain information and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures herein are adequate to make the information presented not misleading. It is
suggested that these unaudited consolidated financial statements be read in conjunction with the audited financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 2, 2011, File No. 0-11003.
These consolidated financial statements include the accounts of Wegener Communications, Inc. (WCI), our wholly-owned subsidiary.
In the opinion of the Company, the statements
for the unaudited interim periods presented include all adjustments, which were of a normal recurring nature, necessary to present
a fair statement of the results of such interim periods. The results of operations for the interim periods presented are not necessarily
indicative of the results of operations for the entire year.
WEGENER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
|
|
|
June 3,
|
|
|
June 1,
|
|
|
June 3,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Revenue, net
|
|
$
|
1,913,078
|
|
|
$
|
2,214,505
|
|
|
$
|
5,664,504
|
|
|
$
|
6,617,652
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of products sold
|
|
|
1,727,579
|
|
|
|
1,597,969
|
|
|
|
4,546,071
|
|
|
|
4,552,975
|
|
|
Selling, general and administrative
|
|
|
700,521
|
|
|
|
716,365
|
|
|
|
1,934,716
|
|
|
|
2,387,085
|
|
|
Research and development
|
|
|
519,995
|
|
|
|
304,904
|
|
|
|
1,258,814
|
|
|
|
899,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
2,948,095
|
|
|
|
2,619,238
|
|
|
|
7,739,601
|
|
|
|
7,839,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(1,035,017
|
)
|
|
|
(404,733
|
)
|
|
|
(2,075,097
|
)
|
|
|
(1,222,261
|
)
|
|
Interest expense
|
|
|
(92,813
|
)
|
|
|
(98,262
|
)
|
|
|
(273,067
|
)
|
|
|
(277,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,127,830
|
)
|
|
$
|
(502,995
|
)
|
|
$
|
(2,348,164
|
)
|
|
$
|
(1,499,355
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
(0.09
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Shares used in per share calculation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic and diluted
|
|
|
13,147,051
|
|
|
|
13,147,051
|
|
|
|
13,147,051
|
|
|
|
12,976,721
|
|
See accompanying notes to consolidated financial statements.
WEGENER CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
|
|
|
June 1,
2012
(Unaudited)
|
|
|
September 2,
2011
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
394,314
|
|
|
$
|
475,548
|
|
|
Accounts receivable, net
|
|
|
968,473
|
|
|
|
2,056,339
|
|
|
Inventories, net
|
|
|
1,552,745
|
|
|
|
1,530,366
|
|
|
Other
|
|
|
214,725
|
|
|
|
268,092
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
3,130,257
|
|
|
|
4,330,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
1,363,027
|
|
|
|
1,469,206
|
|
|
Capitalized software costs, net
|
|
|
785,587
|
|
|
|
1,287,638
|
|
|
Other assets
|
|
|
166,900
|
|
|
|
197,400
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,445,771
|
|
|
$
|
7,284,589
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Capital Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Line of credit-related party
|
|
$
|
4,250,000
|
|
|
$
|
4,250,000
|
|
|
Accounts payable
|
|
|
1,989,402
|
|
|
|
1,813,493
|
|
|
Accrued expenses
|
|
|
2,465,364
|
|
|
|
2,069,636
|
|
|
Deferred revenue
|
|
|
329,027
|
|
|
|
401,480
|
|
|
Customer deposits
|
|
|
247,366
|
|
|
|
237,204
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
9,281,159
|
|
|
|
8,771,813
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Capital deficit
|
|
|
|
|
|
|
|
|
Preferred stock, $20.00 par value; 250,000 shares authorized;
none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.01 par value; 100,000,000 and 30,000,000
shares authorized; 13,147,051 shares issued and
outstanding
|
|
|
131,471
|
|
|
|
131,471
|
|
|
Additional paid-in capital
|
|
|
20,112,577
|
|
|
|
20,112,577
|
|
|
Accumulated deficit
|
|
|
(24,079,436
|
)
|
|
|
(21,731,272
|
)
|
|
Total capital deficit
|
|
|
(3,835,388
|
)
|
|
|
(1,487,224
|
)
|
|
Total liabilities and capital deficit
|
|
$
|
5,445,771
|
|
|
$
|
7,284,589
|
|
See accompanying notes to consolidated financial
statements.
WEGENER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL
DEFICIT
(Unaudited)
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 3, 2010
|
|
|
12,647,051
|
|
|
$
|
126,471
|
|
|
$
|
20,006,702
|
|
|
$
|
(20,264,861
|
)
|
|
Common stock awards
|
|
|
500,000
|
|
|
|
5,000
|
|
|
|
57,500
|
|
|
|
-
|
|
|
Share-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
48,375
|
|
|
|
-
|
|
|
Net loss for the nine months
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,499,355
|
)
|
|
BALANCE at June 3, 2011
|
|
|
13,147,051
|
|
|
$
|
131,471
|
|
|
$
|
20,112,577
|
|
|
$
|
(21,764,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 2, 2011
|
|
|
13,147,051
|
|
|
$
|
131,471
|
|
|
$
|
20,112,577
|
|
|
$
|
(21,731,272
|
)
|
|
Net loss for the nine months
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,348,164
|
)
|
|
BALANCE at June 1, 2012
|
|
|
13,147,051
|
|
|
$
|
131,471
|
|
|
$
|
20,112,577
|
|
|
$
|
(24,079,436
|
)
|
See accompanying notes to consolidated financial
statements.
WEGENER CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine months ended
|
|
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,348,164
|
)
|
|
$
|
(1,499,355
|
)
|
Adjustments to reconcile net loss to net
cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,215,484
|
|
|
|
830,432
|
|
|
Share-based compensation expense
|
|
|
-
|
|
|
|
110,875
|
|
|
Increase in provision for bad debts
|
|
|
25,000
|
|
|
|
103,000
|
|
|
Increase in provision for inventory reserves
|
|
|
65,000
|
|
|
|
85,000
|
|
|
Increase in provision for warranty reserves
|
|
|
24,900
|
|
|
|
112,000
|
|
|
Changes in assets and liabilities
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
1,062,866
|
|
|
|
(730,533
|
)
|
|
Inventories
|
|
|
(87,379
|
)
|
|
|
1,155,000
|
|
|
Other assets
|
|
|
53,367
|
|
|
|
65,224
|
|
|
Accounts payable
|
|
|
175,909
|
|
|
|
(38,606
|
)
|
|
Accrued expenses
|
|
|
370,828
|
|
|
|
339,496
|
|
|
Deferred revenue
|
|
|
(72,453
|
)
|
|
|
(140,848
|
)
|
|
Customer deposits
|
|
|
10,162
|
|
|
|
147,598
|
|
|
Net cash provided by operating activities
|
|
|
495,520
|
|
|
|
539,283
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
Property and equipment expenditures
|
|
|
(22,151
|
)
|
|
|
(33,592
|
)
|
|
Capitalized software additions
|
|
|
(554,603
|
)
|
|
|
(671,243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used for investing activities
|
|
|
(576,754)
|
|
|
|
(704,835)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
Net change in borrowings under revolving line of credit
|
|
|
-
|
|
|
|
400,000
|
|
|
Net cash provided by financing activities
|
|
|
-
|
|
|
|
400,000
|
|
(Decrease) increase in cash
|
|
|
(81,234
|
)
|
|
|
234,448
|
|
|
Cash, beginning of period
|
|
|
475,548
|
|
|
|
231,091
|
|
|
Cash, end of period
|
|
$
|
394,314
|
|
|
$
|
465,53
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
13,975
|
|
|
$
|
23,818
|
|
See accompanying notes to consolidated financial
statements.
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 Going Concern
The accompanying consolidated financial
statements have been prepared on a going concern basis which contemplates the realization of assets and liquidation of liabilities
in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
We have experienced recurring net losses
from operations, which have caused an accumulated deficit of approximately $24,079,000 at June 1, 2012. We had a working capital
deficit of approximately $6,151,000 at June 1, 2012 compared to $4,441,000 at September 2, 2011.
Our cash flow requirements during the first
nine months of fiscal 2012 were financed by our working capital as the outstanding balance of our loan facility was at the maximum
limit of $4,250,000 throughout the first nine months of fiscal 2012. At July 13, 2012, the outstanding balance on the line of credit
remained at the maximum limit of $4,250,000 and our cash balances were approximately $220,000.
Our backlog scheduled to ship within eighteen
months was approximately $1.8 million at June 1, 2012, compared to $3.5 million at September 2, 2011, and $5.2 million at June
3, 2011. Approximately $607,000 of the June 1, 2012 backlog is scheduled to ship during the fourth quarter of fiscal 2012 and approximately
$307,000 during the first quarter of fiscal 2013.
Our bookings and revenues to date in fiscal
2012 and during the prior fiscal year have been insufficient to attain profitable operations and
to provide adequate levels
of cash flow from operations. During the first, second and third quarters of fiscal 2012 bookings were approximately $900,000,
$987,000 and $947,000, respectively, compared to $3.2 million, $700,000 and $1.6 million, respectively, in the same periods of
fiscal 2011. During all of fiscal year 2011, bookings were $6.4 million. These bookings were well below our expectations primarily
as a result of customer delays in purchasing decisions, deferral of project expenditures and general adverse economic and credit
conditions.
Subsequent to
June 1, 2012
, additional bookings through
July 13, 2012, were approximately $454,000. The amount of orders scheduled to ship during the fourth quarter of fiscal 2012 and
first quarter of fiscal 2013 from the
June 1
, 2012 backlog, along with bookings subsequent to
June 1
, 2012, are insufficient to provide adequate levels of liquidity during those periods.
S
ignificant fiscal 2012 and fiscal 2013 shippable bookings are currently required to meet our quarterly financial and cash
flow projections for the remainder of fiscal 2012 and for the first quarter of fiscal 2013 and beyond. There can be no assurances
that the Company will be able to achieve its projected level of bookings and revenues in 2012 and beyond.
Our day to day liquidity during the third
quarter of fiscal 2012 and continuing to date has been adversely impacted by our low level of revenues and bookings. We currently
believe our expected levels of revenues over the next two quarters are insufficient to provide adequate levels of internally generated
liquidity during those periods. As a result, we believe we will need to raise additional capital or obtain additional borrowings
as supplemental funding to provide adequate liquidity to pay our current level of operating expenses, to provide for anticipated
inventory purchases which will be required for our current level of anticipated revenues during the next two fiscal quarters and
to reduce past due amounts owed to vendors and service providers.
We currently
have limited sources of capital, including the public and private placement of equity securities and additional debt financing.
No assurances can be given that additional capital or borrowings would be available to allow us to
continue as a going concern. If additional capital or borrowings are unavailable, we will likely be forced to
significantly
curtail or restructure our operations during the remainder of fiscal 2012 and beyond, which would have a material adverse effect
on our ability to continue as a going concern and as a result may require the Company to enter into bankruptcy proceedings or cease
operations.
During prior fiscal years and continuing
to date, due to insufficient cash flow from operations and the borrowing limitations under our loan facility, we negotiated extended
payment terms with our two offshore vendors and have been extending other vendors well beyond normal payment terms. During the
third quarter and continuing to date, due to limited availability of cash, we further delayed payments to vendors and service providers
in order to preserve cash balances. We currently expect we will need to further defer scheduled fiscal 2012 fourth quarter payments
to an offshore vendor. Until such vendors are paid within normal payment terms, no assurances can be given that required services
and materials needed to support operations will continue to be provided. In addition, no assurances can be given that vendors will
not pursue legal means to collect past due balances owed. Any interruption of services or materials or initiation of legal means
to collect balances owed would likely have an adverse impact on our operations and could impact our ability to continue as a going
concern.
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note
2 Significant Accounting Policies
The significant accounting policies followed
by the Company are set forth in Note 2 to our audited consolidated financial statements included in the Annual Report on Form 10-K
for the year ended September 2, 2011. The following are updates to those policies.
Research and Development/Capitalized
Software Costs
.
We expense research and development
costs, including expenditures related to development of our software products that do not qualify for capitalization. Software
development costs are capitalized subsequent to establishing technological feasibility. Capitalized costs are amortized based on
the larger of the amounts computed using (a) the ratio that current gross revenues for each product bears to the total of current
and anticipated future gross revenues for that product or (b) the straight-line method over the remaining estimated economic life
of the product. This has resulted in amortization periods ranging from two to three years. Expected future revenues and estimated
economic lives are subject to revisions due to market conditions, technology changes and other factors resulting in shortfalls
of expected revenues or reduced economic lives. In accordance with current accounting guidance, FASB Accounting Standards Codification
(ASC) Topic 985-20 “Costs of Software to Be Sold, Leased, or Marketed”, we evaluated the recoverability and our estimate
of net realizable value of net capitalized software costs at June 1, 2012. This evaluation considered our current near term liquidity
and risks of obtaining addition required financing, declining levels of bookings and backlog, historical revenue forecast accuracy
and historical losses, as well as estimated future revenues, cost of completion and disposal of the asset. During the three and
nine months ended June 1, 2012, amortization expense included in cost of revenues amounted to $599,000 and $1,057,000, respectively,
which included an additional amortization expense charge of $375,000 to reduce the net capitalized software costs asset balance
to our estimate of net realizable value at June 1, 2012. Software development costs capitalized in the third quarter were limited
to $121,000 based on our evaluation of the net realizable value at June 1, 2012. For the nine months ended June 1, 2012, capitalized
amounts were $555,000. At June 1, 2012, capitalized software costs, net of accumulated amortization of $8,406,000, amounted to
$786,000. At September 2, 2011, capitalized software costs, net of accumulated amortization of $7,349,000, amounted to $1,288,000.
Use of Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenue and expenses during the reporting period. Examples include valuation allowances for deferred
tax assets, and provisions for bad debts, inventory obsolescence and accrued expenses. Actual results could differ from these estimates.
Fiscal Year
We use a fifty-two, fifty-three week year.
The fiscal year ends on the Friday closest to August 31. The first nine months of fiscal years 2012 and 2011 both contained thirty-nine
weeks. Fiscal years 2012 and 2011 contain fifty-two weeks.
Note 3 Accounts Receivable
Accounts receivable are summarized as follows:
|
|
|
June 1,
2012
(Unaudited)
|
|
|
September 2,
2011
|
|
|
|
|
|
|
|
|
|
Accounts receivable – trade
|
|
$
|
1,258,513
|
|
|
$
|
2,321,372
|
|
|
Less: allowance for doubtful accounts
|
|
|
(290,039
|
)
|
|
|
(265,033
|
)
|
Accounts receivable, net
|
|
$
|
968,473
|
|
|
$
|
2,056,339
|
|
Sales to a relatively small number
of major customers have typically comprised a majority of our revenues and that trend is expected to continue throughout fiscal
2012 and beyond (see Note 10). At June 1, 2012, four customers accounted for approximately 27.2%, 19.6%, 18.1% and 17.2%, respectively,
of our accounts receivable. At
September 2, 2011, four customers accounted for approximately 28.1%, 15.5%, 14.0% and 10.1%,
respectively, of our accounts receivable.
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 Inventories
Inventories are summarized as follows:
|
|
|
June 1,
|
|
|
|
|
|
|
|
2012
|
|
|
September 2,
|
|
|
|
|
(Unaudited)
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$
|
2,162,047
|
|
|
$
|
2,317,852
|
|
|
Work-in-process
|
|
|
615,351
|
|
|
|
649,384
|
|
|
Finished goods
|
|
|
2,636,092
|
|
|
|
2,450,746
|
|
|
|
|
|
5,413,490
|
|
|
|
5,417,982
|
|
|
|
|
|
|
|
|
|
|
|
|
Less inventory reserves
|
|
|
(3,860,745
|
)
|
|
|
(3,887,616
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Inventories, net
|
|
$
|
1,552,745
|
|
|
$
|
1,530,366
|
|
Our inventory reserve is to provide for
items that are potentially slow-moving, excess or obsolete. Changes in market conditions, lower than expected customer demand and
rapidly changing technology could result in additional slow moving, excess or obsolete inventory that is unsaleable or saleable
at reduced prices.
Note 5 Accrued Expenses
Accrued
expenses consisted of the following:
|
|
|
June 1,
2012
(Unaudited)
|
|
|
September 2,
2011
|
|
|
|
|
|
|
|
|
|
|
Vacation
|
|
$
|
582,852
|
|
|
$
|
573,212
|
|
|
Interest
|
|
|
1,036,682
|
|
|
|
777,589
|
|
|
Payroll and related expenses
|
|
|
149,845
|
|
|
|
109,889
|
|
|
Royalties
|
|
|
248,418
|
|
|
|
194,671
|
|
|
Warranty
|
|
|
122,538
|
|
|
|
122,638
|
|
|
Taxes and insurance
|
|
|
71,372
|
|
|
|
34,757
|
|
|
Commissions
|
|
|
34,279
|
|
|
|
31,529
|
|
|
Professional fees
|
|
|
162,604
|
|
|
|
195,476
|
|
|
Other
|
|
|
56,774
|
|
|
|
29,875
|
|
|
|
|
$
|
2,465,364
|
|
|
$
|
2,069,636
|
|
Note 6 Finance Arrangements
Revolving Line of Credit
Our revolving line of credit (“loan
facility”), amended and effective October 8, 2009, is provided by The David E. Chymiak Trust Dated December 15, 1999 (the
“Trust”). The Trust is controlled by David E. Chymiak who is a beneficial owner of approximately 8.5% of our outstanding
common stock. The loan facility provides a maximum credit limit of $4,250,000 excluding any accrued unpaid interest and bears interest
at the rate of eight percent (8.0%) per annum. At March 2, 2012, the outstanding balance on the loan facility was at the maximum
credit limit of $4,250,000 and accrued unpaid interest amounted to approximately $1,029,000. At July 6, 2012, the outstanding balance
on the line of credit remained at $4,250,000. The loan facility is secured by a first lien on substantially all of WCI’s
assets, including land and buildings, and is guaranteed by Wegener Corporation.
The loan facility matured on April 7, 2012,
and automatically renews for successive twelve (12) month periods provided, however, the Trust may terminate the loan facility
by providing a ninety (90) day written notice of termination at any time subsequent to April 7, 2012. Principal and interest shall
be payable upon the earlier of the maturity date, an event of default as provided by the loan facility, or 90 days following the
date on which the Trust provides written notice to terminate the agreement. In the event of a ninety day notice of termination
of our loan facility, we would need to obtain additional credit facilities or raise additional capital to continue as a going concern
and to execute our business plan. There is no assurance that such financing would be available or, if available, that we would
be able to complete financing on satisfactory terms.
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Under the terms of the facility’s
debt covenants we are required to retain certain executive officers and we are precluded from paying dividends. At June 1, 2012,
we were in compliance with the debt covenants.
Note
7 Income Taxes
For the nine months ended June 1, 2012,
no income tax benefit was recorded due to an increase in the deferred tax asset valuation allowance. The valuation allowance increased
$845,000 in the first nine months of fiscal 2012. At June 1, 2012, net deferred tax assets of $8,823,000 were fully reserved by
a valuation allowance.
At June 1, 2012, we had a federal net operating
loss carryforward of approximately $16,472,000, which expires beginning fiscal 2021 through fiscal 2032. Additionally, we had an
alternative minimum tax credit of $134,000 which was fully offset by the valuation allowance.
Note 8 Share-Based Compensation
During the
nine months ended June
1, 2012,
stock options
for 228,375 and 60,000 shares of common stock, granted under the 1998 Incentive Plan, at exercise
prices of $1.00 and $.84, respectively, per share were forfeited. At June 1, 2012, stock options for 1,020,500 shares of common
stock granted under all Incentive Plans remained outstanding. Exercise prices range from $.125 to $2.50 per share.
Note 9 Earnings Per Share
The following tables represent required
disclosure of the reconciliation of the numerators and denominators of the basic and diluted net earnings per share computations.
|
|
|
Three months ended
|
|
|
|
|
June 1, 2012
|
|
|
June 3, 2011
|
|
|
|
|
Earnings
(Numerator)
|
|
|
Shares
(Denominator)
|
|
|
Per
share
amount
|
|
|
Earnings (Numerator)
|
|
|
Shares (Denominator)
|
|
|
Per
share
amount
|
|
|
Net loss
|
|
$
|
(1,127,830
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(502,995
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available
to common shareholders
|
|
$
|
(1,127,830
|
)
|
|
|
13,147,051
|
|
|
$
|
(0.09
|
)
|
|
$
|
(502,995
|
)
|
|
|
13,147,051
|
|
|
$
|
(0.04
|
)
|
|
|
|
Nine months ended
|
|
|
|
|
June 1, 2012
|
|
|
June 3, 2011
|
|
|
|
|
Earnings
(Numerator)
|
|
|
Shares
(Denominator)
|
|
|
Per
share
amount
|
|
|
Earnings (Numerator)
|
|
|
Shares (Denominator)
|
|
|
Per
share
amount
|
|
|
Net loss
|
|
$
|
(2,348,164
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(1,499,355
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss available
to common shareholders
|
|
$
|
(2,348,164
|
)
|
|
|
13,147,051
|
|
|
$
|
(0.18
|
)
|
|
$
|
(1,499,355
|
)
|
|
|
12,976,721
|
|
|
$
|
(0.12
|
)
|
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Stock options excluded from the diluted
net loss per share calculation due to their anti-dilutive effect are as follows:
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
|
|
|
June 3,
|
|
|
June 1,
|
|
|
June 3,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
Common stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares
|
|
|
1,020,075
|
|
|
|
1,325,075
|
|
|
|
1,020,075
|
|
|
|
1,325,075
|
|
|
Exercise price
|
|
|
$.125 to $2.50
|
|
|
|
$.125 to $2.50
|
|
|
|
$.125 to $2.50
|
|
|
|
$.125 to $2.50
|
|
Note 10 Segment Information and Concentrations
In accordance with ASC Topic
280 “Segment Reporting,” we operate within a single reportable segment, the manufacture and sale of satellite communications
equipment.
In this single operating segment
the Company has two sources of revenues as follows:
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
|
|
|
June 3,
|
|
|
June 1,
|
|
|
June 3,
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Broadcast Satellite
|
|
$
|
1,768,153
|
|
|
$
|
2,109,133
|
|
|
$
|
5,277,560
|
|
|
$
|
6,315,922
|
|
|
Service
|
|
|
144,925
|
|
|
|
105,372
|
|
|
|
386,943
|
|
|
|
301,730
|
|
|
|
|
$
|
1,913,078
|
|
|
$
|
2,214,505
|
|
|
$
|
5,664,503
|
|
|
$
|
6,617,652
|
|
Concentration of products representing
10% or more of the respective period’s revenues is as follows:
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
iPump Media Servers
|
|
|
46.0
|
%
|
|
|
30.2
|
%
|
|
|
25.6
|
%
|
|
|
30.2
|
%
|
|
Enterprise media receivers
|
|
|
27.7
|
%
|
|
|
14.0
|
%
|
|
|
20.8
|
%
|
|
|
(a
|
)
|
|
Audio broadcast receivers
|
|
|
(a)
|
|
|
|
23.6
|
%
|
|
|
20.8
|
%
|
|
|
26.9
|
%
|
|
Extended maintenance contracts
|
|
|
(a)
|
|
|
|
10.0
|
%
|
|
|
10.7
|
%
|
|
|
10.5
|
%
|
(a) Revenues
for the period were less than 10% of total revenues.
Products representing 10% or
more of annual revenues are subject to fluctuations from quarter to quarter as new products and technologies are introduced, new
product features and enhancements are added and as customers upgrade or expand their network operations.
WEGENER CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Revenues by geographic area are
as follows:
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
Geographic Area
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,268,664
|
|
|
$
|
2,106,027
|
|
|
$
|
3,997,484
|
|
|
$
|
4,730,700
|
|
|
Latin America
|
|
|
606,208
|
|
|
|
46,905
|
|
|
|
1,407,795
|
|
|
|
1,321,879
|
|
|
Canada
|
|
|
8,595
|
|
|
|
21,205
|
|
|
|
30,257
|
|
|
|
70,643
|
|
|
Europe
|
|
|
-
|
|
|
|
16,000
|
|
|
|
93,219
|
|
|
|
431,670
|
|
|
Other
|
|
|
29,611
|
|
|
|
24,368
|
|
|
|
135,748
|
|
|
|
62,760
|
|
|
|
|
$
|
1,913,078
|
|
|
$
|
2,214,505
|
|
|
$
|
5,664,503
|
|
|
$
|
6,617,652
|
|
All of the Company’s long-lived
assets are located in the United States.
Customers representing 10% or
more of the respective period’s revenues are as follows:
|
|
Three months ended
|
Nine months ended
|
|
|
June 1,
2012
|
June 3,
2011
|
June 1,
2012
|
June 3,
2011
|
|
|
|
|
|
|
|
Customer 1
|
24.9%
|
(a)
|
17.2%
|
(a)
|
|
Customer 2
|
19.7%
|
(a)
|
11.0%
|
(a)
|
|
Customer 3
|
14.4%
|
(a)
|
15.1%
|
(a)
|
|
Customer 4
|
(a)
|
24.7%
|
(a)
|
10.2%
|
|
Customer 5
|
18.6%
|
(a)
|
(a)
|
18.7%
|
|
Customer 6
|
(a)
|
22.9%
|
19.9%
|
25.8%
|
|
|
(a)
|
Revenues for the period were less than 10% of total revenues.
|
Note 11 Commitments
We have two manufacturing and purchasing
agreements for certain finished goods inventories. At June 1, 2012, outstanding purchase commitments under this agreement amounted
to $92,000.
Note 12 Indemnifications
We routinely sell products with limited
intellectual property indemnification included in the terms of sale or in certain contractual arrangements. The scope of these
indemnities varies, but in some instances includes indemnification for costs, damages and expenses (including reasonable attorneys’
fees) finally awarded in any suit by a third party against the purchaser to the extent based upon a finding the design or manufacture
of the purchased item infringes the proprietary rights of such third party. Certain requests for indemnification have been received
by us pursuant to these arrangements. (See Note 14 to our audited consolidated financial statements included in the Annual Report
on Form 10-K for the year ended September 2, 2011.)
To date, there have been no findings related
to these matters that our products and/or services have infringed upon the proprietary rights of others. Although it is reasonably
possible a liability may be incurred in the future related to these indemnification claims, at this point, any possible range of
loss cannot be reasonably estimated.
Additionally, we are obligated to indemnify
our officers and the members of our Board of Directors pursuant to our bylaws and contractual indemnity agreements.
WEGENER CORPORATION AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL
CONDITION AND RESULTS
OF OPERATIONS
This information should be read in conjunction
with the consolidated financial statements and the notes thereto included in Item 1 of this Quarterly Report and the audited consolidated
financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations
for the year ended September 2, 2011 contained in the Company’s 2011 Annual Report on Form 10-K.
Certain statements contained in this filing
are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and the
Company intends that such forward-looking statements are subject to the safe harbors created thereby. Forward-looking statements
may be identified by words such as "believes," "expects," "projects," "plans," "anticipates,"
and similar expressions, and include, for example, statements relating to expectations regarding future sales, income and
cash flows. Forward-looking statements are based upon the Company’s current expectations and assumptions, which are subject
to a number of risks and uncertainties including, but not limited to: the Company’s ability to continue as a going
concern, customer acceptance and effectiveness of recently introduced products; development of additional business for the Company’s
digital video and audio transmission product lines; effectiveness of the sales organization; the successful development and introduction
of new products in the future; delays in the conversion by private and broadcast networks to next generation digital broadcast
equipment; acceptance by various networks of standards for digital broadcasting; the Company’s liquidity position and capital
resources; general market and industry conditions which may not improve during fiscal year 2012 and beyond; and success of
the Company’s research and development efforts aimed at developing new products. Additional potential risks and uncertainties
include, but are not limited to, economic conditions, customer plans and commitments, product demand, government regulation, rapid
technological developments and changes, intellectual property disputes, performance issues with key suppliers and subcontractors,
delays in product development and testing, availability of raw materials, new and existing well-capitalized competitors, and other
risks and uncertainties detailed from time to time in the Company’s periodic Securities and Exchange Commission filings,
including the Company’s most recent Annual Report on Form 10-K. Such forward-looking statements are subject to risks, uncertainties
and other factors and are subject to change at any time, which could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. Forward-looking statements speak only as of the date the statement was
made. The Company does not undertake any obligation to update any forward-looking statements.
OVERVIEW
We believe the continued global economic
downturn and resulting adverse economic and credit conditions have adversely affected our business, financial condition and results
of operations in prior fiscal years and into the first nine months of fiscal 2012.
Revenues for the three months ended June
1, 2012 decreased $301,000 or 13.6% to $1,913,000 from $2,214,000 for the three months ended June 3, 2011. Revenues for the nine
months ended June 1, 2012 decreased $953,000 or 14.4% to $5,565,000 from $6,618,000 for the nine months ended June 3, 2011. Operating
results for the three and nine month periods ended June 1, 2012, were a net loss of $(1,128,000) or $(0.09) per share and a net
loss of $(2,348,000) or $(0.18) per share, respectively, compared to a net loss of $(503,000) or $(0.04) per share and a net loss
of $(1,499,000) or $(0.12) per share for the same periods ended June 3, 2011.
The accompanying consolidated financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going
concern. The audit report relating to the Consolidated Financial Statements for the year ended September 2, 2011 contained an explanatory
paragraph regarding the Company’s ability to continue as a going concern. (See the Liquidity and Capital Resources section
for further discussion.)
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 1,
2012 COMPARED TO THREE AND NINE MONTHS ENDED JUNE 3, 2011
The following table sets forth, for the
periods indicated, the components of the results of operations as a percentage of sales:
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
June 1,
2012
|
|
|
June 3,
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
Cost of products sold
|
|
|
90.3
|
|
|
|
72.2
|
|
|
|
80.3
|
|
|
|
68.8
|
|
|
Gross profit margin
|
|
|
9.7
|
|
|
|
27.8
|
|
|
|
19.7
|
|
|
|
31.2
|
|
|
Selling, general, and administrative
|
|
|
36.6
|
|
|
|
32.3
|
|
|
|
34.1
|
|
|
|
36.1
|
|
|
Research and development
|
|
|
27.2
|
|
|
|
13.8
|
|
|
|
22.2
|
|
|
|
13.6
|
|
|
Operating loss
|
|
|
(54.1
|
)
|
|
|
(18.3
|
)
|
|
|
(36.6
|
)
|
|
|
(18.5
|
)
|
|
Interest expense
|
|
|
(4.9
|
)
|
|
|
(4.4
|
)
|
|
|
(4.8
|
)
|
|
|
(4.2
|
)
|
|
Net loss
|
|
|
(59.0
|
)%
|
|
|
(22.7
|
)%
|
|
|
(41.4
|
)%
|
|
|
(22.7
|
)%
|
The operating results for the three and
nine month periods ended June 1, 2012, were a net loss of $(1,128,000) or $(0.09) per share and a net loss of $(2,348,000) or $(0.18)
per share, respectively, compared to a net loss of $(503,000) or $(0.04) per share and a net loss of $(1,499,000) or $(0.12) per
share for the same periods ended June 3, 2011.
Revenues
- Revenues for the
three months ended June 1, 2012 decreased $301,000 or 13.6% to $1,913,000 from $2,214,000 for the three months ended June 3, 2011.
Revenues for the nine months ended June 1, 2012 decreased $953,000 or 14.4% to $5,565,000 from $6,618,000 for the nine months ended
June 3, 2011.
Revenues for the three and nine months
ended June 1, 2012, were adversely affected by lower than expected shippable bookings for the periods primarily as a result of
customer delays in purchasing decisions and a deferral of project expenditures. Revenues and order backlog are subject to the timing
of significant orders from customers and remain difficult to forecast. As a result, we expect future revenue levels and operating
results to continue to fluctuate from quarter to quarter.
Fiscal 2012 third quarter and first nine
month revenues included (i) shipments of Unity
®
550 receivers to a faith based private network for continued network
expansion, (ii) ipump
®
6420 audio media servers to Dial Global for its radio network and (iii) shipments of ipump
®
562 enterprise media receivers to Comtelsat and SSL Digital S.A. for continued network expansion. Revenues for the first
nine months of fiscal 2012 included shipments of Encompass LE2 audio receivers to Muzak LLC.
Fiscal 2011 third quarter revenues included
(i) continued shipments of Encompass LE2 audio receivers to business music provider, Muzak LLC, (ii) ipump
®
6420
audio media servers to Salem Communications and to Educational Media Foundation for network expansion projects and (iii) shipments
of Unity
®
550 receivers to a faith based private network for continued network expansion. In addition, Unity
®
550 receivers were shipped to Microspace to provide digital signage displays to their retail client. Revenues for the first nine
months of fiscal 2011 included ipump
®
562 enterprise media receivers for an international satellite digital signage
project, ipump
®
6400 media server equipment for an international health and education network as well as continued
shipments of Encompass LE2 audio receivers to Muzak LLC.
For the three months ended June 1, 2012,
four customers accounted for 24.9%, 19.6%, 18.6% and 14.4% of revenues, respectively. For the nine months ended June 1, 2012, three
of these customers accounted for 17.2%, 15.1% and 11.0% of revenues, respectively, and one additional customer accounted for 19.9%
of revenues. For the three months ended June 3, 2011, two customers accounted for 24.7% and 22.9% of revenues, respectively. For
the nine months ended June 3, 2011, these two customers accounted for 10.2% and 25.8% of revenues, respectively, and one additional
customer accounted for 18.7% of revenues. Sales to a relatively small number of major customers have typically comprised a majority
of our revenues and that trend is expected to continue throughout the remainder of fiscal 2012 and beyond. Concentrations of revenue
are likely to occur in any one or more of our products in any of our reporting periods. Product revenues are subject to fluctuations
from quarter to quarter and year to year as new products and technologies are introduced, new product features and enhancements
are added and as customers upgrade or expand their network operations.
Our backlog scheduled to ship within eighteen
months was approximately $1.8 million at June 1, 2012, compared to $3.5 million at September 2, 2011, and $5.2 million at June
3, 2011. Three customers accounted for approximately 54.3%, 13.8% and 8.8%, respectively, of the backlog at June 1, 2012. Approximately
$607,000 of the June 1, 2012 backlog is scheduled to ship during the fourth quarter of fiscal 2012, $307,000 during the first quarter
of fiscal 2013 and $848,000 is scheduled to ship in the remaining three quarters of fiscal 2013.
Gross Profit Margins
- The
Company's gross profit margin percentages were 9.7% and 19.7% for the three and nine months ended June 1, 2012, compared to 27.8%
and 31.2% for the same periods ended June 3, 2011. Gross profit margin dollars decreased $431,000 or 69.9% for the three month
period ended June 1, 2012, compared to the same period ended June 3, 2011. For the first nine months of fiscal 2012 gross profit
margins dollars decreased $946,000 or 45.8%, compared to the same period in fiscal 2011. The decrease in the profit margin percentage
and dollars in the three and nine month periods of fiscal 2012 compared to the same period in fiscal 2011 was primarily due to
an increase in capitalized software amortization expenses and the decrease in revenues which resulted in higher unit fixed costs.
Cost of products sold in the three and
nine month periods of fiscal 2012 included capitalized software amortization expenses of $599,000 and $1,057,000, respectively,
compared to $222,000 and $653,000 for the same periods of fiscal 2011. The increase in capitalized software amortization expenses
in the three and nine month periods of fiscal 2012 was due to an additional charge of $375,000 to reduce the capitalized software
costs asset balance to our estimate of net realizable value at June 1, 2012. (See Note 2 to the Consolidated Financial Statements).
Inventory reserve charges were $25,000 and $65,000 in the three and nine month periods of fiscal 2012, respectively, compared to
$25,000 and $85,000 in the same periods of fiscal 2011. Warranty provisions included in cost of products sold in the third quarter
and first nine months of fiscal 2012 were none and $25,000, respectively, compared to $40,000 and $112,000, respectively, in the
same periods of fiscal 2011.
Selling, General and Administrative
- Selling, general and administrative (SG&A) expenses decreased $15,000 or 2.2% to $701,000 for the three months ended June
1, 2012, compared to $716,000 for the same period of fiscal 2011. For the nine months ended June 1, 2012, SG&A expenses decreased
$452,000 or 19.0% to $1,935,000 compared to $2,387,000 for the same period of fiscal 2011. Corporate SG&A expenses in the third
quarter of fiscal 2012 increased $2,000, or 1.5%, to $124,000 compared to $122,000 for the same period in fiscal 2011. For the
nine months ended June 3, 2011, corporate SG&A expenses decreased $172,000, or 34.2%, to $331,000 compared to $503,000 in the
same period in fiscal 2011. Corporate SG&A expenses
in the nine months ended June 3, 2011
i
ncluded non-cash share-based compensation expenses of approximately $111,000 for stock option and restricted
stock awards compared to none in the same period of fiscal 2012. In addition,
professional and director fees decreased $44,000
and $13,000, respectively, for the nine months ended June 1, 2012. WCI’s SG&A expenses decreased $18,000, or 3.0%, to
$576,000 from $594,000 and $281,000, or 14.9%, to $1,604,000 from $1,885,000 for the three and nine months ended June 1, 2012,
compared to the same periods in fiscal 2011. Decreases in WCI’s SG&A expenses for the three months ended June 1, 2012
included (i) salaries and related payroll costs of $38,000 due to a reduction in headcount; (ii) general overhead costs of $27,000
due to cost reduction efforts of overhead expenses and (iii) bad debt expense of $18,000. These decreases were offset by increases
in marketing expenses of $65,000 primarily for digital signage products. For the first nine months of fiscal 2012 decreases in
WCI’s SG&A expenses included (i) salaries and related payroll costs of $181,000 due to the reduction in headcount and
severance costs; (ii) general overhead costs of $89,000 due to the cost reduction efforts of overhead expenses; (iii) bad debt
expense of $78,000 and (iv) in-house commission expense of $20,000 due to the low level of bookings and revenues in the first nine
months of fiscal 2012. These decreases were offset by an increase in marketing expenses of $88,000 primarily for digital signage
products. As a percentage of revenues, SG&A expenses were 36.6% and 34.2% for the three and nine month periods ended June 1,
2012, respectively, compared to 32.3% and 36.1% for the same periods in fiscal 2011.
Research and Development
- Research and development (R&D) expenditures, including capitalized software development costs, increased $112,000, or 21.1%,
to $641,000 for the three months ended June 1, 2012, from $529,000 for the three months ended June 3, 2011. For the nine months
ended June 1, 2012, R&D expenditures increased $242,000, or 15.4%, to $1,813,000 from $1,571,000 for the same period in fiscal
2011. The increase in expenditures in the third quarter and first nine months of fiscal 2012 compared to the same period of fiscal
2011 was mainly due to increases in consulting expenses, proto-type parts expenses and salaries and related personnel costs. Capitalized
software development costs amounted to $121,000 and $555,000 for the third quarter and first nine months of fiscal 2012 compared
to $224,000 and $671,000 for the same periods of fiscal 2011. The decrease in capitalized software development costs in the three
and nine month periods of fiscal 2012 was due to our assessment of the net realizable value of these additions in conjunction with
our evaluation of net realizable value of the net capitalized software costs asset balance at June 1, 2012, as discussed above
and in Note 2 to the Consolidated Financial Statements. R&D expenses, excluding capitalized software expenditures, were $520,000
or 27.2% of revenues, and $1,259,000 or 22.2% of revenues, for the three and nine months ended June 1, 2012, respectively, compared
to $305,000 or 13.8% of revenues, and $900,000 or 13.6% of revenues, for the same periods of fiscal 2011, respectively. The increases
in R&D expenses for the third quarter and first nine months of fiscal 2012 are due to the reductions in capitalized software
development costs and the increase in expenditures during the periods as discussed above.
Interest Expense
- Interest
expense decreased $5,000 to $93,000 for the three months ended June 1, 2012, compared to $98,000 for the three months ended June
3, 2011. For the nine months ended June 1, 2012, interest expense decreased $4,000 to $273,000 compared to $277,000 for the same
period in fiscal 2011.
Income Tax Expense
- For
the nine months ended June 1, 2012, no income tax benefit was recorded due to an increase in the deferred tax asset valuation allowance.
The valuation allowance increased $674,000 in the first nine months of fiscal 2012. At June 1, 2012, net deferred tax assets of
$8,652,000 were fully reserved by a valuation allowance. At June 1, 2012, we had a federal net operating loss carryforward of approximately
$16,472,000, which expires beginning fiscal 2021 through fiscal 2032. Additionally, we had an alternative minimum tax credit of
$134,000 which was fully offset by the valuation allowance.
LIQUIDITY AND CAPITAL RESOURCES
NINE
MONTHS ENDED JUNE 1, 2012
We have experienced recurring net losses
from operations, which have caused an accumulated deficit of approximately $24,079,000 at June 1, 2012. We had a working capital
deficit of approximately $6,151,000 at June 1, 2012 compared to $4,441,000 at September 2, 2011.
Our cash flow requirements during the first
nine months of fiscal 2012 were financed by our working capital as the outstanding balance of our loan facility was at the maximum
limit of $4,250,000 throughout the first nine months of fiscal 2012. At
July
13, 2012, the outstanding
balance on the line of credit remained at the maximum limit of $4,250,000 and our cash balances were approximately $220,000.
Our bookings and revenues to date in fiscal
2012 and during the prior fiscal year have been insufficient to attain profitable operations and
to provide adequate levels
of cash flow from operations. During the first, second and third quarters of fiscal 2012 bookings were approximately $900,000,
$987,000 and $947,000 respectively, compared to $3.2 million, $700,000 and $1.6 million respectively, in the same periods of fiscal
2011. Fiscal 2011 bookings were $6.4 million. These bookings were well below our expectations primarily as a result of customer
delays in purchasing decisions, deferral of project expenditures and general adverse economic and credit conditions.
Subsequent
to June
1, 2012
, additional bookings through July 13, 2012, were approximately $454,000. The
amount of orders scheduled to ship during the fourth quarter of fiscal 2012 and first quarter of fiscal 2013 from the June
1
, 2012 backlog, along with bookings subsequent to June
1
, 2012, are
insufficient to provide adequate levels of liquidity during those periods. S
ignificant
fourth
quarter
fiscal 2012 and fiscal 2013 shippable bookings are currently required to meet our quarterly financial and cash flow
projections for the remainder of fiscal 2012 and for the first quarter of fiscal 2013 and beyond.
Our day to day liquidity during the third
quarter of fiscal 2012 and continuing to date has been adversely impacted by our low level of revenues and bookings. We currently
believe our expected levels of revenues over the next two quarters are insufficient to provide adequate levels of internally generated
liquidity during those periods. As a result, we believe we will need to raise additional capital or obtain additional borrowings
as supplemental funding to provide adequate liquidity to pay our current level of operating expenses, to provide for anticipated
inventory purchases which will be required for our current level of anticipated revenues during the next two fiscal quarters and
to reduce past due amounts owed to vendors and service providers.
We currently have limited sources
of capital, including the public and private placement of equity securities and additional debt financing. No assurances can be
given that additional capital or borrowings would be available to allow us to continue as a going concern. If additional capital
or borrowings are unavailable, we will likely be forced to significantly curtail or restructure our operations during the remainder
of fiscal 2012 and beyond, which would have a material adverse effect on our ability to continue as a going concern and as a result
may require the Company to enter into bankruptcy proceedings or cease operations.
During prior fiscal years and continuing
to date, due to insufficient cash flow from operations and borrowing limitations under our loan facility, we negotiated extended
payment terms with our two offshore vendors and have been extending other vendors well beyond normal payment terms. During the
third quarter and continuing to date, due to limited availability of cash, we further delayed payments to vendors and service providers
in order to preserve cash balances. We currently expect we will need to further defer scheduled fiscal 2012 fourth quarter payments
to an offshore vendor (see “Cash Flows” discussion below). Until such vendors are paid within normal payment terms,
no assurances can be given that required services and materials needed to support operations will continue to be provided. In addition,
no assurances can be given that vendors will not pursue legal means to collect past due balances owed. Any interruption of services
or materials or initiation of legal means to collect balances owed would likely have an adverse impact on our operations and could
impact our ability to continue as a going concern.
Financing Agreements
WCI’s revolving line of credit (“loan
facility”), amended and effective October 8, 2009, is provided by The David E. Chymiak Trust Dated December 15, 1999 (the
“Trust”). The Trust is controlled by David E. Chymiak who is a beneficial owner of approximately 8.5% of our outstanding
common stock. The loan facility provides a maximum credit limit of $4,250,000 excluding any accrued unpaid interest and bears
interest at the rate of eight percent (8.0%) per annum. At June 1, 2012, the outstanding balance on the loan facility was at the
maximum credit limit of $4,250,000 and accrued unpaid interest amounted to approximately $1,029,000. At July 8, 2012, the outstanding
balance on the line of credit remained at $4,250,000. All principal and interest shall be payable in U.S. dollars or, upon mutual
agreement of the parties decided in good faith at the time payment is due, other good and valuable consideration. The loan facility
is secured by a first lien on substantially all of WCI’s assets, including land and buildings, and is guaranteed by Wegener
Corporation.
The loan facility matured on April 7, 2012,
and automatically renews for successive twelve (12) month periods provided, however, the Trust may terminate the facility by providing
a ninety (90) day written notice of termination at any time. Principal and interest shall be payable upon the earlier of the maturity
date, an event of default as provided by the loan facility, or 90 days following the date on which the Trust provides written notice
to terminate the agreement. In the event of a ninety day notice of termination of our loan facility, we would need to obtain additional
credit facilities or raise additional capital to continue as a going concern and to execute our business plan. There is no assurance
that such financing would be available or, if available, that we would be able to complete financing on satisfactory terms.
Under the terms of the loan facility’s
debt covenants we are required to retain certain executive officers and we are precluded from paying dividends. At June 1, 2012,
we were in compliance with the debt covenants.
Cash Flows
During the first nine months of fiscal
2012, operating activities provided $496,000 of cash. Net loss adjusted for expense provisions and depreciation and amortization
(before working capital changes) used $1,018,000 of cash while changes in accounts receivable, deferred revenue and customer deposit
balances provided $1,001,000 of cash. Changes in accounts payable and accrued expenses provided $547,000 of cash, while changes
in inventories and other assets used $34,000 of cash. Cash used by investing activities was $577,000, which consisted of capitalized
software additions of $555,000 and equipment additions of $22,000. No cash was provided or used by financing activities.
At June 1,
2012, our net inventory balances were $1,553,000 compared to $1,530,000 at September 2, 2011. As discussed above, we will need
to increase inventory purchases beginning in the next two fiscal quarters in order to have sufficient inventory balances to support
anticipated revenue levels beginning in the first quarter of fiscal 2013 and beyond which will require additional capital or
additional borrowings as supplemental funding to provide for the anticipated level of inventory purchases. In addition, it is likely
during the next two fiscal quarters we will need continued and possible additional credit limits as well as continued extended
payment terms from offshore and domestic suppliers; and increased customer deposits from future bookings. No assurances may be
given that we will be able to generate sufficient liquidity from these or other sources that may be required to support future
inventory purchases.
If we are unable to increase inventory purchases in the next two fiscal
quarters, it would have a material adverse impact on revenue levels for those periods and beyond which would have a material adverse
effect on our operating results and likely impact our ability to continue as a going concern
.
A substantial portion of future
inventory purchases will be with offshore suppliers whom we have been paying under extended payment terms and credit limits
which are beyond normal payment terms and credit limits. During the first nine months of fiscal 2012, an offshore
vendor’s outstanding accounts payable balance, plus amounts of scheduled deliveries of open purchase commitments,
exceeded our current credit limit. As a result, we were required to make accelerated payments in the amounts of $127,000 in
November 2011, $339,000 in December 2011, $216,000 in January 2012, $105,000 in March 2012 and $105,000 in April 2012. We
currently expect we will need to request a further deferral of scheduled fiscal 2012 fourth quarter payments of approximately
$384,000 to this offshore vendor. No assurance may be given that we will be granted the additional extension.
During the first nine months of fiscal
2012, a significant source of our cash flow from operations came from customer deposits, primarily from one customer’s order
prepayment in the amount of $648,000. In exchange for the prepayment, we offered a price discount of approximately $37,000. In
addition, in the first nine months of fiscal 2012, we offered 2%-10; net-30 day terms to two customers related to their receivable
balances. During the first nine months of fiscal 2012 approximately $765,000 was received utilizing the discounted payment terms.
We expect to continue to pursue customer deposits on larger new orders and offer early payment discounts to larger customer receivable
balances. No assurance may be given that we will be successful in these efforts.
We have two manufacturing and purchasing
agreements for certain finished goods inventories. At June 1, 2012, outstanding purchase commitments under this agreement amounted
to $92,000.
The Company’s
long-term contractual obligations as of June
1, 2012
consisted of:
|
|
|
Payments Due by Period
|
|
|
Contractual Obligations
|
|
Total
|
|
|
Fiscal
2012
|
|
|
Fiscal
2013-2014
|
|
|
Fiscal
2015-2016
|
|
|
Operating leases
|
|
$
|
45,000
|
|
|
$
|
16,000
|
|
|
$
|
29,000
|
|
|
$
|
-
|
|
|
Line of credit-related party
|
|
|
4,250,000
|
|
|
|
4,250,000
|
|
|
|
-
|
|
|
|
-
|
|
|
Purchase commitments
|
|
|
92,000
|
|
|
|
92,000
|
|
|
|
-
|
|
|
|
-
|
|
|
Total
|
|
$
|
4,387,000
|
|
|
$
|
4,358,000
|
|
|
$
|
29,000
|
|
|
$
|
-
|
|
CRITICAL ACCOUNTING POLICIES
The accounting policies and related estimates
that we believe are the most critical to understanding our consolidated financial statements, financial condition and results of
operations and those that require management judgment and assumptions, or involve uncertainties are as follows:
Revenue Recognition
–
Our principal sources of revenue are from the sale of satellite communications equipment and network control software products
and product repair services, extended maintenance contracts and installation and training services. Historically, product repair
services, maintenance contracts and installation and training services are less than 10% of our net revenues. Our revenue recognition
policies are in compliance with FASB Accounting Standards Codification (ASC) Topic 605 “Revenue Recognition.” Revenue
is recognized when persuasive evidence of an agreement with the customer exists, delivery has occurred or services have been provided,
the sales price is fixed or determinable, collectability is reasonably assured, and risk of loss and title have transferred to
the customer. Revenue from hardware product sales is recognized when risk of loss and title has transferred which is generally
upon shipment. In some cases, particularly with international shipments, customer contracts are fulfilled under terms known as
ex-works, in accordance with international commercial terms. In these instances, revenue is recognized upon delivery, which is
the date that the goods are made available to the customer as requested by the customer and no further obligations of the Company
remain. Hardware products are typically sold on a stand-alone basis but may include hardware maintenance contracts. Embedded in
our hardware products is internally developed software of varying applications
that
function together with the hardware to deliver the product's essential functionality.
The embedded software is not sold
separately, is not a significant focus of the marketing effort and we do not provide post-contract customer support specific to
embedded software. The functionality that the software provides is marketed as part of the overall product. Service revenues are
recognized at the time of performance. Extended maintenance contract revenues are recognized ratably over the term of the arrangement,
which is typically one year. For network control software products we recognize revenue in accordance with the applicable software
revenue recognition guidance. Typical deliverables in a software arrangement may include network control software, extended software
maintenance contracts, training and installation. Provisions for returns, discounts and trade-ins, based on historical experience,
have not been material.
When arrangements
contain
multiple elements, the deliverables are separated into more than one unit of accounting when the following criteria
are met: (i) the delivered element(s) has value to the customer on a stand-alone basis, and (ii) if a general right of
return exists relative to the delivered item, delivery or performance of the undelivered element(s) is probable and substantially
in the control of the Company. We allocate revenue to all deliverables based on their relative selling prices. In such circumstances,
we use a hierarchy to determine the selling price to be used for allocating revenue to deliverables: (i) vendor-specific objective
evidence of selling price (“VSOE”), (ii) third-party evidence of selling price (“TPE”), and (iii) management’s
best estimate of the selling price (“BESP”). VSOE generally exists only when we sell the deliverable separately and
is the price actually charged by the Company for that deliverable. The objective of BESP is to determine the price at which the
Company would transact a sale if the product or service were sold on a stand-alone basis. We determine the BESP for a product or
service by considering multiple factors including, but not limited to, geographies, market conditions, competitive landscape, internal
costs, gross margin objectives, and pricing practices. If a delivered element does not meet the criteria in the applicable accounting
guidance to be considered a separate unit of accounting, revenue is deferred until the undelivered elements are fulfilled. Accordingly,
the determination of BESP can impact the timing of revenue recognition for an arrangement.
We recognize revenue
in certain circumstances before delivery has occurred (commonly referred to as “bill and hold” transactions). In such
circumstances, among other things, risk of ownership has passed to the buyer, the buyer has made a written fixed commitment to
purchase the finished goods, the buyer has requested the finished goods to be held for future delivery as scheduled and designated
by the buyer, and no additional performance obligations by the Company exist. For these transactions, the finished goods are segregated
from inventory and normal billing and credit terms are granted. No bill and hold transactions were recorded in the first nine months
of fiscal 2012.
These policies require management, at the
time of the transaction, to assess whether the amounts due are fixed or determinable, collection is reasonably assured, and to
perform an evaluation of arrangements containing multiple elements, including management’s estimate of the selling price.
These assessments are based on the terms of the arrangement with the customer, past history and creditworthiness of the customer.
If management determines that collection is not reasonably assured or undelivered elements are unfulfilled, revenue recognition
is deferred until these conditions are satisfied.
Inventory Reserves
–
Inventories are valued at the lower of cost (at standard cost, which approximates actual cost
on a first-in, first-out basis) or market. Inventories include the cost of raw materials, labor and manufacturing overhead. We
make inventory reserve provisions for obsolete or slow-moving inventories as necessary to properly reflect inventory value. These
reserves are to provide for items that are potentially slow-moving, excess or obsolete. Changes in market conditions, lower than
expected customer demand and rapidly changing technology could result in additional obsolete and slow-moving inventory that is
unsaleable or saleable at reduced prices, which could require additional inventory reserve provisions. At June 1, 2012, inventories,
net of reserve provisions, amounted to $1,553,000.
Capitalized Software Costs
–
Software development costs are capitalized subsequent to establishing technological feasibility.
Capitalized costs are amortized based on the larger of the amounts computed using (a) the ratio that current gross revenues for
each product bears to the total of current and anticipated future gross revenues for that product, or (b) the straight-line method
over the remaining estimated economic life of the product. Expected future revenues and estimated economic lives are subject to
revisions due to market conditions, technology changes and other factors resulting in shortfalls of expected revenues or reduced
economic lives, which could result in additional amortization expense or write-offs. In accordance with current accounting guidance
(ASC Topic 985-20 “Costs of Software to Be Sold, Leased, or Marketed”), we evaluated the recoverability and our estimate
of net realizable value of net capitalized software costs at June 1, 2012. This evaluation considered our current near term liquidity
and risks of obtaining addition required financing, declining levels of bookings and backlog, historical revenue forecast accuracy
and historical losses, as well as estimated future revenues, cost of completion and disposal of the asset. During the three and
nine months ended June 1, 2012 amortization expense included in cost of revenues amounted to $599,000 and $1,057,000, respectively,
which included an additional amortization expense charge of $375,000 to reduce the net capitalized software costs asset balance
to our estimate of net realizable value at June 1, 2012. Software development costs capitalized in the third quarter were limited
to $121,000 based on our evaluation of the net realizable value at June 1, 2012. For the nine months ended June 1, 2012, capitalized
amounts were $555,000. At June 1, 2012, capitalized software costs, net of accumulated amortization of $8,406,000, amounted to
$786,000. At September 2, 2011, capitalized software costs, net of accumulated amortization of $7,349,000, amounted to $1,288,000.
Deferred Tax Asset Valuation Allowance
– Deferred tax assets are recognized for deductible temporary differences, net operating loss carryforwards, and tax credit
carryforwards if it is more likely than not that the tax benefits will be realized. Realization of our deferred tax assets depends
on generating sufficient future taxable income prior to the expiration of the loss and credit carryforwards. At June 1, 2012, net
deferred tax assets of $8,823,000 were fully reserved by a valuation allowance. For the nine months ended June 1, 2012, the valuation
allowance was increased by $845,000.
Accounts Receivable Valuation
– We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make
required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances would be required. At June 1, 2012, accounts receivable, net of allowances for doubtful
accounts, amounted to $968,000
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ITEM 4. CONTROLS AND PROCEDURES
The Company carried out an evaluation,
under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (CEO)
and the Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls
and procedures as of the end of the period covered by this report (June 1, 2012). Based upon that evaluation, the Company’s
CEO and CFO have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Securities Exchange Act of 1934, as amended) are effective. There has been no change in the Company’s internal control
over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1A. RISK FACTORS
Our operations and financial results are
subject to various risks and uncertainties that could adversely affect our business, financial condition, results of operations,
and the market price for our common stock. Part I, Item 1A, “Risk Factors,” contained in our Annual Report
on
Form 10-K for the year ended September 2, 2011
, includes a detailed discussion of these factors
which have not changed materially from those included in the Form 10-K other than as set forth below.
We may not have sufficient
capital to continue as a going concern.
Our bookings
and revenues to date in fiscal 2012 and during the prior fiscal year have been insufficient to attain profitable operations and
to provide adequate levels of cash flow from operations. We have experienced recurring net losses from operations, which have
caused an accumulated deficit of approximately $24,079,000 at June 1, 2012. We had a working capital deficit of approximately $6,151,000
at June 1, 2012 compared to $4,441,000 at September 2, 2011. Our day to day liquidity during the third quarter of fiscal 2012 and
continuing to date has been adversely impacted by our low level of revenues and bookings. We currently believe our expected levels
of revenues over the next two quarters are insufficient to provide adequate levels of internally generated liquidity during those
periods. As a result, we believe we will need to raise additional capital or additional borrowings as supplemental funding
to provide adequate liquidity to pay our current level of operating expenses, to provide for anticipated inventory purchases which
will be required for our current level of anticipated revenues during the next two fiscal quarters and to reduce past due amounts
owed to vendors and service providers. We currently have limited sources of capital, including the public and private placement
of equity securities and additional debt financing.
No assurances can be given that additional
capital or borrowings would be available to allow us to continue as a going concern. If additional capital or borrowings are unavailable,
we will likely be forced to
significantly curtail or restructure our operations during the
remainder of fiscal 2012 and beyond, which would have a material adverse effect on our ability to continue as a going concern and
as a result may require the Company to enter into bankruptcy proceedings or cease operations.
We may not have sufficient
financing to support future inventory purchases.
At June 1, 2012, our net inventory balances
were $1,553,000 compared to $1,530,000 at September 2, 2011. As discussed above, we will need to increase inventory purchases beginning
in the next two fiscal quarters in order to have sufficient inventory balances to support anticipated revenue levels beginning
in the first quarter of fiscal 2013 and beyond which will require additional capital or additional borrowings as supplemental
funding to provide for the anticipated level of inventory purchases. In addition, it is likely during the next two fiscal quarters
we will need continued and possible additional credit limits as well as continued extended payment terms from offshore and domestic
suppliers; and increased customer deposits from future bookings. No assurances may be given that we will be able to generate sufficient
liquidity from these or other sources that may be required to support future inventory purchases. If we are unable to increase
inventory purchases in the next two fiscal periods, it would have a material adverse impact on revenue levels for those periods
and beyond which would have a material adverse effect on our operating results likely impact our ability to continue as a going
concern.
ITEM 2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On December 6, 2010, pursuant to our
2010 Incentive Plan, the Compensation Committee authorized the issuance to all eligible employees of
the
Company
common stock options to purchase an aggregate of 563,700 shares of common stock and issued equally to the four non-employee
members of the
Board
common stock options to purchase an aggregate of 100,000 shares of common
stock. Stock options for 638,700 shares of common stock are exercisable at $0.125 and one stock option for 25,000 shares of common
stock, issued to a 10% or greater stockholder and executive officer, is exercisable at $0.1375. The options vest upon issuance
and expire five years from the date of issuance. In addition, 500,000 shares of restricted common stock were granted to two executive
officers. The issuances of the restricted stock were made in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2) of the Securities Act of 1933, as amended, and the provisions of Regulation D promulgated thereunder.
As of July 16, 2012, a registration statement
for the 2010 Incentive Plan has not been filed, although the Company expects to file a Form S-8 Registration Statement. Therefore,
all of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
I
tem
6.
Exhibits
The following documents are filed as exhibits
to this report. An asterisk identifies those exhibits previously filed and incorporated herein by reference. For each such asterisked
exhibit there is shown below the description of the prior filing. Exhibits which are not required for this report are omitted.
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Exhibit No.
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Description of Exhibit
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3.1
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*
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Certificate of Incorporation as amended through May 4, 1989. (1)
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3.1.1
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*
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Amendment to Certificate of Incorporation. (2)
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3.1.2
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*
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Amendment to Certificate of Incorporation effective January 27, 2009. (4)
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3.1.3
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*
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Amendment to Certificate of Incorporation effective February 1, 2011. (5)
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3.1.4
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*
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Amendment to Certificate of Incorporation effective January 31, 2012. (6)
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31.1
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Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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(1)
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Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended September 1, 1989, as filed with the Commission on November 30, 1989.+
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(2)
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Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended May 30, 1997, as filed with the Commission on June 30, 1997.+
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(3)
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Incorporated by reference to the Company's Current Report on Form 8-K, dated May 17, 2006, as filed with the Commission on May 22, 2006.+
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(4)
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Incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended August 28, 2009, as filed with the Commission on November 25, 2009.+
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(5)
(6)
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Incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarter ended March 4, 2011, as filed with the Commission on April 18, 2011.+
Incorporated by reference to
the Company's Quarterly Report on Form 10-Q for the quarter ended March 2, 2012, as filed with the Commission on April 16, 2012.+
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+
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SEC file No. 0-11003
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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WEGENER CORPORATION
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(Registrant)
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Date: July 18, 2012
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By
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/s/ C. Troy Woodbury, Jr.
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C. Troy Woodbury, Jr.
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President and Chief Executive Officer
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(Principal Executive Officer)
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Date: July 18, 2012
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By
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/s/ James Traicoff
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James Traicoff
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Treasurer and Chief
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Financial Officer
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(Principal Financial and Accounting Officer)
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Wegener (PK) (USOTC:WGNR)
過去 株価チャート
から 10 2024 まで 11 2024
Wegener (PK) (USOTC:WGNR)
過去 株価チャート
から 11 2023 まで 11 2024
