SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 for the quarterly period ended March 30, 2002 or
--- Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period to
----------- -------------
Commission File Number: 0-8588
TECHNICAL COMMUNICATIONS CORPORATION
------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2295040
---------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
100 Domino Drive, Concord, MA 01742-2892
------------------------------ ---------------------------------------
(Address of principal (zip code)
executive offices)
Registrant's telephone number, including area code: (978) 287-5100
----------------
N/A
-----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Number of shares of Common
Stock, $.10 par value, outstanding as of May 3, 2002: 1,332,953.
INDEX
Page
----
PART I Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets,
as of March 30, 2002 (unaudited) and September 29, 2001 1
Condensed Consolidated Statements of Operations,
Three (3) months ended March 30, 2002 and March 31, 2001 (unaudited), 2
Condensed Consolidated Statements of Operations,
Six (6) months ended March 30, 2002 and March 31, 2001 (unaudited), 3
Condensed Consolidated Statements of Cash Flows,
Six (6) months ended March 30, 2002 and March 31, 2001 (unaudited), 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 8
PART II Other Information 12
Signatures 13
PART I. Financial Information - Item 1. Financial Statements
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 30, 2002 September 29, 2001
-------------- ------------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 541,135 $ 1,618,915
Accounts receivable - trade, less
allowance for doubtful accounts
of $70,000 and $15,000,
respectively 792,935 67,232
Inventories 1,198,679 1,261,608
Other current assets 346,009 355,837
----------- ------------
Total current assets 2,878,758 3,303,592
----------- ------------
Equipment and leasehold improvements 4,932,074 4,921,498
Less: accumulated depreciation and
amortization 4,679,986 4,570,459
----------- ------------
252,088 351,039
----------- ------------
$ 3,130,846 $ 3,654,631
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 171,876 $ 231,208
Accrued liabilities
Compensation and related expenses 156,964 111,381
Other 553,287 635,070
----------- ------------
Total current liabilities 882,127 977,659
----------- ------------
Stockholders' Equity:
Common stock, par value $.10 per share;
authorized 3,500,000 shares; issued
1,333,185 shares and 1,323,328 shares 133,319 132,333
Treasury stock at cost, 232 shares (1,934) (1,934)
Additional paid-in capital 1,371,706 1,365,600
Retained earnings 745,628 1,180,973
---------- ------------
Total stockholders' equity 2,248,719 2,676,972
----------- -----------
$3,130,846 $ 3,654,631
========== ===========
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Page 1
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
------------------
March 30, 2002 March 31, 2001
-------------- --------------
Net sales $ 714,310 $ 779,297
Cost of sales 256,080 408,259
----------- ----------
Gross profit 458,230 371,038
Operating expenses:
Selling, general and
administrative expenses 510,178 936,184
Product development costs 409,389 329,603
----------- ----------
Total operating expenses 919,567 1,265,787
----------- ----------
Operating loss (461,337) (894,749)
----------- ----------
Other income (expense):
Interest income 2,869 18,641
Interest expense
(367) (537)
Other (90) 5,999
---------- ----------
Total other income 2,412 24,103
---------- ----------
Loss before income taxes (458,925) (870,646)
Provision for income taxes - -
---------- ----------
Net loss $ (458,925) $ (870,646)
========== ==========
Net loss per common share:
Basic $ (0.35) $ (0.66)
Diluted $ (0.35) $ (0.66)
Weighted average common shares
outstanding used in computation:
Basic 1,331,502 1,314,182
Diluted 1,331,502 1,314,182
The accompanying notes are an integral part of
these condensed consolidated financial statements.
Page 2
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Six Months Ended
-------------------------------------
March 30, 2002 March 31, 2001
-------------- --------------
Net sales $ 2,032,667 $ 2,100,214
Cost of sales 757,604 831,811
----------- -----------
Gross profit 1,275,063 1,268,403
Operating expenses:
Selling, general and
administrative expenses 1,006,816 2,151,938
Product development costs 719,278 570,579
----------- -----------
Total operating expenses 1,726,094 2,722,517
----------- -----------
Operating loss (451,031) (1,454,114)
----------- -----------
Other income (expense):
Interest income 10,093 54,484
Interest expense (736) (1,069)
Other 6,329 (72,631)
----------- -----------
Total other income (expense) 15,686 (19,216)
----------- -----------
Loss before income taxes (435,345) (1,473,330)
Provision for income taxes - -
----------- -----------
Net loss $ (435,345) $(1,473,330)
=========== ===========
Net loss per common share:
Basic $ (0.33) $ (1.14)
Diluted $ (0.33) $ (1.14)
Weighted average common shares
outstanding used in computation:
Basic 1,329,522 1,297,876
Diluted 1,329,522 1,297,876
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Page 3
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
-----------------
March 30,2002 March 31,2001
------------- -------------
Operating Activities:
Net loss $ (435,345) $ (1,473,330)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Depreciation and amortization 109,527 261,625
Non-cash compensation - 24,789
Changes in assets and liabilities:
Accounts receivable (725,703) (599,644)
Inventories 62,929 73,230
Other current assets 9,828 (1,924)
Accounts payable and other accrued liabilities (95,532) (82,470)
---------- -----------
Net cash used by operating activities (1,074,296) (1,797,724)
----------- -----------
Investing Activities:
Additions to equipment and leasehold improvements (10,576) (41,338)
---------- -----------
Net cash used by investing activities (10,576) (41,338)
---------- -----------
Financing Activities:
Proceeds from stock issuance 7,092 24,976
---------- -----------
Net cash provided by financing activities 7,092 24,976
---------- -----------
Net decrease in cash and cash equivalents (1,077,780) (1,814,086)
Cash and cash equivalents at beginning of the period 1,618,915 3,121,617
---------- -----------
Cash and cash equivalents at the end of the period $ 541,135 $ 1,307,531
========== ===========
Supplemental Disclosures:
Interest paid $ 614 $ 1,069
Income taxes paid 2,975 3,256
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Page 4
TECHNICAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STATEMENT OF FAIR PRESENTATION
Interim Financial Statements. The accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals), which are, in the opinion of management, necessary for fair
presentation of the results of operations for the periods presented. Interim
results are not necessarily indicative of the results to be expected for a full
year.
Certain disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted as allowed by Form 10-QSB. The accompanying unaudited consolidated
financial statements should be read in conjunction with the Company's
consolidated financial statements for the year ending September 29, 2001 as
filed with the Securities and Exchange Commission on Form 10-KSB.
NOTE 1. Inventories
Inventories consisted of the following:
March 30, 2002 September 29, 2001
-------------- ------------------
Finished Goods $ 196,099 $ 140,962
Work in Process 572,642 493,947
Raw Materials 429,938 626,699
---------- -----------
$ 1,198,679 $ 1,261,608
========= ==========
NOTE 2. Line of Credit
The Company has a $1 million asset-based credit facility with Coast Business
Credit ("Coast"). The line carries an interest rate of prime plus 1/2% (5.25% at
March 30, 2002). This revolving line of credit is collateralized by
substantially all the assets of the Company and requires no compensating
balances. There are financial covenants associated with the line, which call for
a minimum net tangible worth of $1,676,000 at March 30, 2002 and increasing over
time based on certain criteria. The agreement also contains a rolling six month
EBIT requirement. At March 30, 2002 the Company was in violation of its rolling
six month EBIT covenant. The Company is currently negotiating with Coast to
obtain a waiver of this violation. The amount of borrowings is limited to a
percentage of certain accounts receivable balances and the line of credit
matures in December 2002. There were no outstanding borrowings during the
quarter.
NOTE 3. Liquidity Matters
The Company's revenues have historically included significant transactions with
foreign governments and other organizations. The Company expects this trend to
continue. The timing of these transactions has in the past and will in the
future have a significant impact on the cash flow of the Company. Delays in the
timing of significant expected sales transactions would cause a significant
negative effect on the Company's operations, however the Company has some
ability to mitigate this effect through further cost cutting measures.
The Company has incurred losses year to date as well as in recent years. Recent
revenue levels have been lower than management's expectation, which has resulted
in a reduction in liquidity at March 30, 2002,
Page 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
NOTE 3. Liquidity Matters (cont'd)
and has caused a violation of a covenant of its line of credit at March 30,
2002. As a result, the Company has used, and expects to continue to use, cash
and cash equivalents to fund its operations. Additionally, if a waiver cannot be
obtained from Coast, the Company will be dependent on the cash generated from
operations to meet its working capital needs. The Company believes there is
currently sufficient cash and cash equivalents to meet its working capital needs
for at least the remainder of the fiscal year. The recoverability of a major
portion of the recorded asset amounts shown in the accompanying balance sheet is
dependent upon continued operations of the Company, which in turn is dependent
upon the Company's ability to increase sales, to succeed in its future
operations and to maintain its financing with Coast or another lender. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, and classification
and amounts of liabilities that might be necessary should Company be unable to
continue funding its operations.
Management has taken significant steps to streamline its operations and
will continue to do so as the situation warrants. These steps have included
reducing headcount, and other expenses and limiting capital expenditures. But,
in order to achieve and sustain profitability and to get to positive cash flow
from operations, the Company must grow its revenue. It is uncertain as to
whether or when this will occur. Management believes, based on its understanding
of the marketplace, that future sales will occur in a sufficient manner to allow
the Company to continue as a viable business. However, if there are no
improvements in the business or the economy worsens, the Company may need to
take further actions, including further reductions of headcount, curtailing
employee benefits and/or downsizing its facilities in order to reduce its
working capital requirements.
NOTE 4. Major Customers and Export Sales
During the six months ended March 30, 2002, the Company had three
customers, representing 47% (22%, 15% and 10%) of net sales. During the six
months ended March 31, 2001, the Company had two customers, representing 45%
(33% and 12%) of net sales.
A breakdown of net sales is as follows:
March 30, 2002 March 31, 2001
-------------------------- ------------------------
3 Months 6 Months 3 Months 6 Months
-------- -------- -------- --------
Domestic $ 66,253 $ 445,511 $ 79,740 $ 279,724
Foreign 648,057 1,587,156 699,557 1,820,490
---------- ----------- ---------- -----------
Total sales $ 714,310 $ 2,032,667 $ 779,297 $ 2,100,214
========== =========== ========== ===========
A summary of foreign sales by geographic area follows:
March 30, 2002 March 31, 2001
------------------------ --------------------------
3 Months 6 Months 3 Months 6 Months
-------- -------- -------- --------
North America
(excluding the U.S.) 0.0% 1.2% 12.0% 10.8%
Central and South America 1.2% 13.6% 1.1% 38.4%
Europe 20.6% 9.0% 3.6% 1.9%
Mid-East and Africa 76.7% 57.5% 75.6% 45.1%
Far East 1.5% 18.7% 7.7% 3.8%
Page 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)
NOTE 5. Loss Per Share
Outstanding potentially dilutive stock options which were not included in
the loss per share calculations at March 30, 2002 and March 31, 2001, were as
follows: 354,369 and 274,069 respectively.
Page 7
FORWARD-LOOKING STATEMENTS
NOTE: THE DISCUSSIONS IN THIS FORM 10-Q, INCLUDING ANY DISCUSSION OF OR IMPACT,
EXPRESSED OR IMPLIED, ON TECHNICAL COMMUNICATIONS CORPORATION'S (THE COMPANY)
ANTICIPATED OPERATING RESULTS AND FUTURE EARNINGS, INCLUDING STATEMENTS ABOUT
THE COMPANY'S ABILITY TO ACHIEVE GROWTH AND PROFITABILITY, CONTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED. THE COMPANY'S OPERATING RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. THE
COMPANY'S OPERATING RESULTS MAY BE AFFECTED BY MANY FACTORS, INCLUDING BUT NOT
LIMITED TO FUTURE CHANGES IN EXPORT LAWS OR REGULATIONS, CHANGES IN TECHNOLOGY,
THE EFFECT OF FOREIGN POLITICAL UNREST, THE ABILITY TO HIRE, RETAIN AND MOTIVATE
TECHNICAL, MANAGEMENT AND SALES PERSONNEL, THE RISKS ASSOCIATED WITH THE
TECHNICAL FEASIBILITY AND MARKET ACCEPTANCE OF NEW PRODUCTS, CHANGES IN
TELECOMMUNICATIONS PROTOCOLS, THE EFFECTS OF CHANGING COSTS, EXCHANGE RATES AND
INTEREST RATES AND THE COMPANY'S ABILITY TO RENEGOTIATE ITS LINE OF CREDIT WITH
ITS BANK. THESE AND OTHER RISKS ARE DETAILED FROM TIME TO TIME IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FORM 10-K FOR
THE FISCAL YEAR ENDED SEPTEMBER 29, 2001, THE FORM 10-Q FOR THE QUARTER ENDED
DECEMBER 29, 2001 AND THIS FORM 10-Q FOR THE QUARTER ENDED MARCH 30, 2002.
PART I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The Company is in the business of designing, manufacturing and marketing
communications security equipment. The Company receives orders for equipment
from customers, which may take several months or longer to manufacture and ship.
With the exception of long-term contracts where revenue is recognized under the
percentage of completion method, the Company generally recognizes income on a
unit-of-delivery basis. This latter method can cause revenues to vary widely
from quarter to quarter and therefore quarterly comparisons of revenue may not
be indicative of any trend.
Three Months ended March 30, 2002 as compared to
the Three Months ended March 31, 2001
The Company showed a net loss of $459,000 for the second quarter of fiscal 2002
as compared to a net loss of $871,000 for the same period in fiscal 2001. This
increase in profitability is primarily attributable to the significant decrease
in selling, general and administrative expenses.
Net sales for the quarter ended March 30, 2002 and March 31, 2001, were $714,000
and $779,000, respectively. Gross profit for the second quarter of fiscal 2002
was $458,000 as compared to gross profit of $371,000 for the same period of
fiscal 2001. This represented an increase in gross profit of 23% for the
quarter. Gross profit expressed as a percentage of sales was 64% in 2002 as
compared to 48% for the same period in fiscal 2001. These increases were
primarily attributable to higher margin sales in fiscal 2002.
Selling, general and administrative expenses for the second quarter of fiscal
2002 were $510,000 and $936,000 for the same quarter in fiscal 2001. This
decrease of 46% was primarily attributable to $163,000 reduction in general and
administrative expenses and a reduction of $263,000 in selling and marketing
costs.
The decrease in general and administrative costs were substantially attributable
to a $29,000 decrease in personnel related costs associated with a reduced
headcount and overall cost reductions of approximately $63,000 associated with a
restructuring program and the related workforce reductions. In addition, the
Page 8
write-off of amortizable assets in fiscal 2001 has resulted in a reduction of
$58,000 in amortization expense in the current fiscal quarter.
The decrease in selling costs was primarily attributable to decreased third
party sales commissions and marketing contracts totaling $82,000. The decrease
also included a reduction in travel, payroll and benefit related costs
associated with the lower sales volume, of approximately $ 45,000. During the
second quarter of fiscal 2001 the Company developed a major proposal and
conducted a marketing study. These efforts were not repeated in fiscal 2002 and
resulted in lower expenditures of approximately $101,000 in the current fiscal
quarter.
Product development costs for the quarter ended March 30, 2002 were $409,000
compared to $330,000 for the same period in fiscal 2001. This increase of 24%
was attributable to a shift away from billable product development in fiscal
2002, which increased product development cost in fiscal 2002 by approximately
$180,000. This was offset by a decrease associated with a reduced headcount and
consultants of approximately $103,000.
Six Months ended March 30, 2002 as compared to
the Six Months ended March 31, 2001
The Company showed a net loss of $435,000 for the six months ended March 30,
2002 as compared to a net loss of $1,473,000 for the same period in fiscal 2001.
This increase in profitability is primarily attributable to the significant
decrease in selling, general and administrative expenses.
Net sales for the six months ended March 30, 2002 and March 31, 2001, were
$2,033,000 and $2,100,000, respectively. Gross profit for the six months ended
March 30, 2002 was $1,275,000 as compared to gross profit of $1,268,000 for the
same period of fiscal 2001. Gross profit expressed as a percentage of sales was
63% and 60%, for fiscal 2002 and 2001, respectively. The increase in gross
profit was primarily attributable to slightly higher margin sales in fiscal
2002.
Selling, general and administrative expenses for the six months ended March 30,
2002 were $1,007,000 and $2,152,000 for the same period in fiscal 2001. This
decrease of 53% was primarily attributable to $410,000 reduction in general and
administrative expenses and a reduction of $735,000 in selling and marketing
costs.
The decrease in general and administrative costs were attributable to a $64,000
decrease in personnel related costs associated with a reduced headcount and
overall cost reductions of approximately $170,000 associated with a
restructuring program and the related workforce reductions. In addition, the
write-off of amortizable assets in fiscal 2001 has resulted in a reduction of
approximately $117,000 in amortization expense in the current fiscal quarter.
The decrease in selling costs was primarily attributable to decreased third
party sales commissions and marketing contracts totaling $232,000. The decrease
also included a reduction in travel, payroll and benefit related costs
associated with the lower sales volume, of approximately $99,000. During fiscal
2001 the Company developed a major proposal, conducted a marketing study and a
market research project. These efforts were not repeated in fiscal 2002 and
resulted in lower expenditures of approximately $344,000 in the current fiscal
quarter.
Product development costs for the six months ended March 30, 2002 were $719,000
compared to $571,000 for the same period in fiscal 2001. This increase of 26%
was attributable to a shift away from billable product development in fiscal
2002, which increased product development cost in fiscal 2002 by approximately
$387,000. This was offset by a decrease associated with a reduced headcount and
consultants of approximately $234,000.
Recent Accounting Pronouncement
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.
Page 9
The Company is required to apply the new rules on accounting for goodwill and
other intangible assets by fiscal year 2003. The Company currently does not have
any goodwill or intangible assets and does not expect a material impact from the
adoption of these standards.
In August 2001, the Financial Accounting Standards Board issued SFAS 144
Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144").
This Statement addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. This Statement supersedes FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and amends the accounting and reporting provisions of
APB Opinion No. 30. Reporting the Results of Operations -- Reporting the Effect
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, for the disposal of a segment of
a business. The provisions of FAS 144 will be effective for fiscal years
beginning after December 15, 2001.
Liquidity and Capital Resources
Cash and cash equivalents decreased by $1,078,000 or 67% to $541,000 as of March
30, 2002, from a balance of $1,619,000 at September 29, 2001. This decrease was
primarily due to an increase of accounts receivable and a decrease in accounts
payable and accrued expenses, which were partially offset by non-cash
adjustments and a reduction in inventories.
The Company has a $1 million asset-based credit facility with Coast Business
Credit ("Coast"). The line carries an interest rate of prime plus 1/2% (5.25% at
March 30, 2002). This revolving line of credit is collateralized by
substantially all the assets of the Company and requires no compensating
balances. There are financial covenants associated with the line, which call for
a minimum net tangible worth of $1,676,000 at March 30, 2002 and increasing over
time based on certain criteria. The agreement also contains a rolling six month
EBIT requirement. At March 30, 2002 the Company was in violation of its rolling
six month EBIT covenant. The Company is currently negotiating with Coast to
obtain a waiver of this violation. The amount of borrowings is limited to a
percentage of certain accounts receivable balances and the line of credit
matures in December 2002. There were no outstanding borrowings during the
quarter.
As of March 30, 2002, the Company has four outstanding standby letters of credit
amounting to $182,000, which are secured by compensating cash collateral.
The Company's revenues have historically included significant transactions with
foreign governments and other organizations. The Company expects this trend to
continue. The timing of these transactions has in the past and will in the
future have a significant impact on the cash flow of the Company. Delays in the
timing of significant expected sales transactions would cause a significant
negative effect on the Company's operations, however the Company has some
ability to mitigate this effect through further cost cutting measures. The
Company believes there is currently sufficient cash and cash equivalents to meet
its working capital needs for at least the remainder of the year.
We have incurred losses year to date as well as in recent years. This,
accompanied by the recent economic downturn and the slowdown of capital
spending, has resulted in lower sales volume, which has required the Company to
continue utilizing significant amounts of cash and cash equivalents to fund
operations.
We have reduced our workforce and overhead expenses as described above and
curtailed capital spending and other uses of cash. But, in order to achieve and
sustain profitability and to get to positive cash flow from operations, the
Company must grow its revenue. It is uncertain as to whether or when this will
occur.
Assuming that Company can execute on its current plans to grow revenue, and the
business climate for spending does not worsen, we believe that with the cash
generated from operations and the current cash and cash equivalents, that the
Company will have sufficient resources to meet its working capital requirements
for at least the next twelve months. However, if there are no recoveries or
improvements in the business or the economy worsens, we may need to take other
actions in order to fund our working capital resource requirements.
Page 10
Additionally, the financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, and
classification and amounts of liabilities that might be necessary should the
Company be unable to continue funding its operations.
To date, inflation has not had a material impact on our financial results.
Page 11
PART II. Other Information
Item 1. Legal Proceedings:
There are no current matters pending.
Item 2. Changes in Securities and Use of Proceeds:
Not applicable.
Item 3. Defaults Upon Senior Securities:
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
The Annual Meeting of Stockholders of the Company was held on
February 11, 2002. The meeting was conducted for the purpose of (i)
electing two Class II Directors to serve for a term of three years;
(ii) ratifying the adoption of the Company's 2001 Stock Option Plan
and (iii) ratifying the election of the Company's independent
auditors.
The ratification of the election of two (2) Class II
Directors was approved with 1,151,099 votes in favor,
100,706 votes withheld and 1,132,016 votes in favor,
119,789 votes withheld respectively.
The ratification of the adoption of the Company's 2001
Stock Option Plan was approved with 1,017,552 votes in
favor and 136,328 votes against and 97,925 votes
abstaining.
The ratification of the Company's auditors was approved
with 1,227,733 votes in favor, 11,147 votes against and
12,925 votes abstaining.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
a. Exhibits:
None.
b. Reports on Form 8-K:
None.
Page 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECHNICAL COMMUNICATIONS CORPORATION
------------------------------------
(Registrant)
May 13, 2002 By: /s/ Carl H. Guild, Jr.
------------ --------------------------------
Date Carl H. Guild, Jr., President and Chief
Executive Officer
May 13, 2002 By: /s/ Michael P. Malone
------------ --------------------------------
Date Michael P. Malone, Chief Financial Officer
Page 13