Delaware
|
98-0204758
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
INDEX
|
|||
PART
I.
|
FINANCIAL
INFORMATION
|
||
ITEM
1.
|
Condensed
consolidated balance sheets at January 31, 2008 (unaudited) and April 30,
2007
|
3-4
|
|
Condensed
consolidated statements of income for the three and nine months ended
January 31, 2008 and 2007 (unaudited)
|
5
|
||
Condensed
consolidated statement of shareholders’ equity for the nine months ended
January 31, 2008 (unaudited)
|
6
|
||
Condensed
consolidated statements of cash flows for the nine months ended January
31, 2008 and 2007 (unaudited)
|
7-8
|
||
Notes
to unaudited condensed consolidated financial statements
|
9-22
|
||
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
23-34
|
|
ITEM
3.
|
Controls
and Procedures
|
35
|
|
PART
II.
|
OTHER
INFORMATION
|
||
ITEM
1
|
Legal
proceedings
|
36
|
|
ITEM
2
|
Unregistered
sales of equity securities and use of proceeds
|
36
|
|
ITEM
3
|
Defaults
upon senior securities
|
36
|
|
ITEM
4
|
Submission
of matters to a vote of security holders
|
36
|
|
ITEM
5
|
Other
information
|
36
|
|
ITEM
6
|
Exhibits
|
36
|
|
SIGNATURES
|
37
|
January
31,
|
April
30,
|
|||||||
ASSETS
|
2008
|
2007
|
||||||
(Unaudited)
|
(Note
1)
|
|||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 8,417,056 | $ | 21,558,739 | ||||
Accounts
receivable, net of allowance of $98,786 at January 31, 2008 and April 30,
2007
|
25,017,770 | 16,560,636 | ||||||
Costs
and estimated earnings in excess of billings on uncompleted
contracts
|
4,599,455 | 2,499,940 | ||||||
Inventory
|
3,430,194 | 2,260,082 | ||||||
Prepaid
expenses and other current assets
|
1,605,511 | 732,043 | ||||||
Deferred
tax assets
|
75,271 | 27,000 | ||||||
Total
current assets
|
43,145,257 | 43,638,440 | ||||||
PROPERTY
AND EQUIPMENT, net
|
6,571,669 | 5,488,920 | ||||||
OTHER
INTANGIBLE ASSETS, net
|
2,315,778 | 1,683,349 | ||||||
GOODWILL
|
23,966,807 | 20,469,608 | ||||||
OTHER
ASSETS
|
439,999 | 273,353 | ||||||
Total
assets
|
$ | 76,439,510 | $ | 71,553,670 |
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
January
31,
|
April
30,
|
||||||
2008
|
2007
|
|||||||
(Unaudited)
|
(Note
1)
|
|||||||
CURRENT
LIABILITIES:
|
||||||||
Current
portion of loans payable
|
$ | 3,059,968 | $ | 2,598,872 | ||||
Current
portion of borrowings under line of credit
|
570,000 | - | ||||||
Current
portion of capital lease obligations
|
30,205 | - | ||||||
Accounts
payable and accrued expenses
|
8,931,405 | 6,802,110 | ||||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
2,680,072 | 2,272,688 | ||||||
Deferred
revenue
|
740,381 | 504,458 | ||||||
Due
to shareholders
|
168,365 | 707,000 | ||||||
Income
taxes payable
|
354,767 | 433,361 | ||||||
Total
current liabilities
|
16,535,163 | 13,318,489 | ||||||
Borrowings
under line of credit
|
644,000 | 4,454,217 | ||||||
Loans
payable, net of current portion
|
195,738 | 284,016 | ||||||
Capital
lease obligations, net of current portion
|
307,270 | - | ||||||
Deferred
tax liabilities
|
835,447 | 611,000 | ||||||
Total
liabilities
|
18,517,618 | 18,667,722 | ||||||
Minority
interest in subsidiary
|
1,390,846 | 1,353,965 | ||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
SHAREHOLDERS'
EQUITY:
|
||||||||
Preferred
stock - $0.0001 par value, 5,000,000 shares authorized, none
issued
|
- | - | ||||||
Common
stock - $0.0001 par value, 75,000,000 shares authorized, 7,105,104 and
6,971,698 shares issued and outstanding at January 31, 2008 and April 30,
2007, respectively
|
710 | 697 | ||||||
Additional
paid-in capital
|
49,494,446 | 47,901,159 | ||||||
Retained
earnings
|
6,788,646 | 3,631,215 | ||||||
Accumulated
other comprehensive income (loss) on foreign currency
translation
|
247,244 | (1,088 | ) | |||||
Total
shareholders' equity
|
56,531,046 | 51,531,983 | ||||||
Total
liabilities and shareholders' equity
|
$ | 76,439,510 | $ | 71,553,670 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
January
31,
|
January
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUE
|
$ | 24,802,079 | $ | 18,121,405 | $ | 74,723,129 | $ | 52,310,727 | ||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Cost
of revenue
|
18,010,149 | 12,150,372 | 53,844,717 | 36,202,802 | ||||||||||||
Selling,
general and administrative expenses
|
5,573,644 | 3,538,395 | 14,151,781 | 9,874,455 | ||||||||||||
Depreciation
and amortization
|
618,002 | 310,074 | 1,616,204 | 880,965 | ||||||||||||
Total
costs and expenses
|
24,201,795 | 15,998,841 | 69,612,702 | 46,958,222 | ||||||||||||
OPERATING
INCOME
|
600,284 | 2,122,564 | 5,110,427 | 5,352,505 | ||||||||||||
OTHER
EXPENSE (INCOME):
|
||||||||||||||||
Interest
expense
|
69,269 | 112,387 | 377,487 | 326,823 | ||||||||||||
Interest
income
|
(81,082 | ) | (120,164 | ) | (436,257 | ) | (294,916 | ) | ||||||||
Minority
interest
|
(23,907 | ) | - | 36,881 | - | |||||||||||
INCOME
BEFORE INCOME TAX PROVISION
|
636,004 | 2,130,341 | 5,132,316 | 5,320,598 | ||||||||||||
Income
tax provision
|
252,701 | 878,462 | 1,974,885 | 2,089,642 | ||||||||||||
NET
INCOME
|
$ | 383,303 | $ | 1,251,879 | $ | 3,157,431 | $ | 3,230,956 | ||||||||
Basic
net income per common share
|
$ | 0.05 | $ | 0.23 | $ | 0.45 | $ | 0.59 | ||||||||
Diluted
net income per common share
|
$ | 0.05 | $ | 0.20 | $ | 0.40 | $ | 0.54 | ||||||||
Basic
weighted average number of common shares outstanding
|
7,093,662 | 5,547,671 | 7,049,099 | 5,454,911 | ||||||||||||
Diluted
weighted average number of common shares outstanding
|
7,801,597 | 6,323,169 | 7,951,545 | 6,011,224 |
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
Paid-In Capital
|
Other
Compre-
|
Total
Shareholders' Equity
|
||||||||||||||||||||||||||||||
Preferred
Stock
|
Common
Stock
|
Retained
|
hensive
|
|||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Earnings
|
Income
(Loss)
|
|||||||||||||||||||||||||||
BALANCE,
May 1, 2007
|
- | $ | - | 6,971,698 | $ | 697 | $ | 47,901,159 | $ | 3,631,215 | $ | (1,088 | ) | $ | 51,531,983 | |||||||||||||||||
Net
issuance of common stock, acquisitions
|
||||||||||||||||||||||||||||||||
of
TAGS, Voacolo, Major and Max
|
- | - | 123,575 | 12 | 1,489,001 | - | - | 1,489,013 | ||||||||||||||||||||||||
Fair
value of stock options granted to employees
|
- | - | - | - | 38,047 | - | - | 38,047 | ||||||||||||||||||||||||
Proceeds
from exercise of stock options
|
- | - | 9,831 | 1 | 60,531 | - | - | 60,532 | ||||||||||||||||||||||||
Equity
issuance cost
|
- | - | - | - | (10,292 | ) | - | - | (10,292 | ) | ||||||||||||||||||||||
Excess
tax benefit from exercise of stock options
|
- | - | - | - | 16,000 | - | - | 16,000 | ||||||||||||||||||||||||
Accumulated
other comprehensive income
|
- | - | - | - | - | - | 248,332 | 248,332 | ||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | $ | 3,157,431 | - | 3,157,431 | |||||||||||||||||||||||
BALANCE,
JANUARY 31, 2008
|
- | $ | - | 7,105,104 | $ | 710 | $ | 49,494,446 | $ | 6,788,646 | $ | 247,244 | $ | 56,531,046 |
Nine
Months Ended
|
||||||||
January
31,
|
||||||||
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES :
|
||||||||
Net
income
|
$ | 3,157,431 | $ | 3,230,956 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
1,616,204 | 880,965 | ||||||
Fair
value of stock options granted to employees
|
38,047 | 30,666 | ||||||
Recovery
of doubtful accounts
|
- | (6,000 | ) | |||||
Amortization
of debt issuance costs
|
- | 39,623 | ||||||
Excess
tax benefit from exercise of stock options
|
(16,000 | ) | - | |||||
Minority
interest
|
36,881 | - | ||||||
Gain
on sale of fixed assets
|
(2,335 | ) | (13,876 | ) | ||||
Deferred
income taxes
|
135,314 | (23,000 | ) | |||||
Changes
in operating assets and liabilities, net of effects of
acquisitions:
|
||||||||
Accounts
receivable
|
(1,559,220 | ) | 3,003,872 | |||||
Costs
and estimated earnings in excess of billings on uncompleted
contracts
|
(148,787 | ) | (42,160 | ) | ||||
Inventory
|
(762,668 | ) | 83,455 | |||||
Prepaid
expenses and other current assets
|
(307,902 | ) | (316,409 | ) | ||||
Other
assets
|
(155,011 | ) | (119,964 | ) | ||||
Accounts
payable and accrued expenses
|
(664,778 | ) | (999,295 | ) | ||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
(734,400 | ) | 1,012,993 | |||||
Deferred
revenue
|
235,804 | 272,579 | ||||||
Income
taxes payable
|
(585,757 | ) | 170,677 | |||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
282,823 | 7,205,082 |
Nine
Months Ended
|
||||||||
January
31,
|
||||||||
2008
|
2007
|
|||||||
INVESTING
ACTIVITIES:
|
||||||||
Acquisition
of property and equipment, net
|
(618,950 | ) | (433,541 | ) | ||||
Acquisition
of NECS, net of cash received
|
(3,534 | ) | (4,458,465 | ) | ||||
Acquisition
of SECS, net of cash received
|
57,451 | (1,877,046 | ) | |||||
Acquisition
of Voacolo, net of cash received
|
(69,601 | ) | - | |||||
Acquisition
of Major, net of cash received
|
(3,091,777 | ) | - | |||||
Acquisition
of Max, net of cash received
|
(523,045 | ) | - | |||||
Acquisition
of Empire, net of cash received
|
(1,772,874 | ) | - | |||||
Acquisition
of James, net of cash received
|
(914,237 | ) | - | |||||
NET
CASH USED IN INVESTING ACTIVITIES
|
(6,936,567 | ) | (6,769,052 | ) | ||||
FINANCING
ACTIVITIES:
|
||||||||
Net
proceeds from exercise of warrants
|
- | 197,875 | ||||||
Net
proceeds from issuance of common stock
|
- | 8,972,112 | ||||||
Net
proceeds from exercise of stock options
|
60,532 | 338,132 | ||||||
Excess
tax benefit from exercise of stock options
|
16,000 | - | ||||||
Equity
issuance costs
|
(10,292 | ) | (50,362 | ) | ||||
(Repayments)/borrowings
under lines of credit, net
|
(5,726,991 | ) | 1,437,446 | |||||
Borrowings/(repayments)
under loans payable, net
|
94,707 | (417,116 | ) | |||||
Payments
of amounts due to shareholders
|
(882,420 | ) | (149,000 | ) | ||||
Payments
of capital lease obligations
|
(57,174 | ) | (15,778 | ) | ||||
NET
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(6,505,638 | ) | 10,313,309 | |||||
Effect
of exchange rate changes on cash
|
17,699 | - | ||||||
NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
(13,141,683 | ) | 10,749,339 | |||||
CASH
AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
21,558,739 | 12,279,646 | ||||||
CASH
AND CASH EQUIVALENTS, END OF THE PERIOD
|
$ | 8,417,056 | $ | 23,028,985 |
Ending
balance, April 30, 2007
|
$ | 20,469,608 | ||
Voacolo
acquisition - purchase price adjustment
|
53,309 | |||
NECS
acquisition - purchase price adjustment
|
35,595 | |||
SECS
acquisition - purchase price adjustment
|
(39,775 | ) | ||
Major
acquisition
|
1,727,136 | |||
Max
acquisition
|
302,880 | |||
Empire
acquisition
|
586,103 | |||
James
acquisition
|
820,818 | |||
Foreign
currency translation adjustment - James
|
11,133 | |||
Ending
balance, January 31, 2008
|
$ | 23,966,807 |
Estimated
useful life (years)
|
January
31,
2008
|
April
30,
2007
|
||||||||||
Customer
lists
|
5 -
9
|
$ | 3,313,000 | $ | 2,607,000 | |||||||
Contract
backlog
|
1 -
3
|
800,100 | 325,200 | |||||||||
4,113,100 | 2,932,200 | |||||||||||
Less
accumulated amortization expense
|
(1,797,322 | ) | (1,248,851 | ) | ||||||||
$ | 2,315,778 | $ | 1,683,349 |
Basic
earnings per share computation
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
January
31,
|
January
31,
|
|||||||||||||||
Numerator:
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
Income
|
$ | 383,303 | $ | 1,251,879 | $ | 3,157,431 | $ | 3,230,956 | ||||||||
Denominator:
|
||||||||||||||||
Basic
weighted average shares outstanding
|
7,093,662 | 5,547,671 | 7,049,099 | 5,454,911 | ||||||||||||
Basic
net income per common share
|
$ | 0.05 | $ | 0.23 | $ | 0.45 | $ | 0.59 |
Diluted
earnings per share computation
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||
January
31,
|
January
31,
|
|||||||||||||||
Numerator:
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
Income
|
$ | 383,303 | $ | 1,251,879 | $ | 3,157,431 | $ | 3,230,956 | ||||||||
Denominator:
|
||||||||||||||||
Basic
weighted average shares outstanding
|
7,093,662 | 5,547,671 | 7,049,099 | 5,454,911 | ||||||||||||
Incremental
shares from assumed conversion:
|
||||||||||||||||
Conversion
of stock options
|
165,049 | 218,932 | 200,673 | 170,440 | ||||||||||||
Conversion
of common stock warrants
|
542,886 | 556,566 | 701,773 | 385,873 | ||||||||||||
Diluted
weighted average shares
|
7,801,597 | 6,323,169 | 7,951,545 | 6,011,224 | ||||||||||||
Diluted
net income per common share
|
$ | 0.05 | $ | 0.20 | $ | 0.40 | $ | 0.54 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||
January, 31, 2008
|
January, 31, 2008
|
|||||||
Net
income
|
$ | 383,303 | $ | 3,157,431 | ||||
Other
comprehensive income – foreign currency translation
adjustments
|
138,367 | 248,332 | ||||||
Comprehensive
income
|
$ | 521,670 | $ | 3,405,763 |
Assets
purchased:
|
||||
Cash
|
$ | 584,094 | ||
Accounts
receivable
|
2,102,984 | |||
Inventory
|
217,500 | |||
Prepaid
expenses
|
101,974 | |||
Costs
in excess of billings
|
215,143 | |||
Fixed
assets
|
346,569 | |||
Backlog
|
200,200 | |||
Customer
lists
|
132,000 | |||
Goodwill
|
1,065,902 | |||
4,966,366 | ||||
Liabilities
assumed:
|
||||
Accounts
payable
|
(732,252 | ) | ||
Accrued
expenses
|
(102,832 | ) | ||
Payroll
and other payables
|
(80,672 | ) | ||
Billings
in excess of costs
|
(686,327 | ) | ||
Deferred
income tax payable
|
(97,000 | ) | ||
Loan
payable
|
(602,984 | ) | ||
Notes
payable
|
(100,436 | ) | ||
(2,402,503 | ) | |||
Purchase
price
|
$ | 2,563,863 |
Assets
purchased:
|
||||
Cash
|
$ | 141,564 | ||
Accounts
receivable
|
1,727,953 | |||
Inventory
|
621,725 | |||
Other
current assets
|
399,664 | |||
Fixed
assets
|
3,415,035 | |||
6,305,941 | ||||
Liabilities
assumed:
|
||||
Accounts
payable
|
(72,710 | ) | ||
Accrued
expenses and other payable
|
(714,126 | ) | ||
Payroll
and other payables
|
(171,463 | ) | ||
Dividends
payable
|
(252,724 | ) | ||
Income
tax payable
|
(235,279 | ) | ||
Notes
payable
|
(1,681,846 | ) | ||
Deferred
revenue
|
(61,519 | ) | ||
Minority
interest
|
(1,330,865 | ) | ||
(4,520,532 | ) | |||
Purchase
price
|
$ | 1,785,409 |
Assets
purchased:
|
||||
Accounts
receivable
|
$ | 3,830,626 | ||
Inventory
|
162,647 | |||
Prepaid
expenses
|
117,349 | |||
Costs
in excess of billings
|
1,769,462 | |||
Fixed
assets
|
682,637 | |||
Other
assets
|
8,855 | |||
Backlog
|
130,000 | |||
Customer
lists
|
390,000 | |||
Goodwill
|
1,727,136 | |||
8,818,712 | ||||
Liabilities
assumed:
|
||||
Cash
overdraft
|
(52,618 | ) | ||
Accounts
payable
|
(424,513 | ) | ||
Accrued
expenses
|
(6,094 | ) | ||
Payroll
and other payable
|
(605,456 | ) | ||
Billings
in excess of costs
|
(985,204 | ) | ||
Line
of credit
|
(2,086,774 | ) | ||
Loan
payable
|
(24,638 | ) | ||
Capital
lease obligation
|
(242,297 | ) | ||
Shareholder
loan
|
(175,420 | ) | ||
(4,603,014 | ) | |||
Purchase
price
|
$ | 4,215,698 |
Assets
purchased:
|
||||
Cash
|
$ | 105,926 | ||
Accounts
receivable
|
256,829 | |||
Costs
in excess of billings
|
4,500 | |||
Fixed
assets
|
21,890 | |||
Other
assets
|
1,950 | |||
Customer
lists
|
216,000 | |||
Goodwill
|
302,880 | |||
909,975 | ||||
Liabilities
assumed:
|
||||
Accrued
expenses
|
(59,186 | ) | ||
Payroll
and other payables
|
(19,318 | ) | ||
Accrued
tax payable
|
(2,500 | ) | ||
(81,004 | ) | |||
Purchase
price
|
$ | 828,971 |
Assets
purchased:
|
||||
Cash
|
$ | 83,155 | ||
Accounts
receivable
|
2,326,029 | |||
Inventory
|
197,961 | |||
Prepaid
expenses
|
371,453 | |||
Costs
in excess of billings
|
149,677 | |||
Fixed
assets
|
212,230 | |||
Backlog
|
344,900 | |||
Customer
lists
|
100,000 | |||
Goodwill
|
586,103 | |||
4,371,508 | ||||
Liabilities
assumed:
|
||||
Accounts
payable
|
(1,113,789 | ) | ||
Accrued
expenses
|
(47,165 | ) | ||
Payroll
and other payable
|
(327,112 | ) | ||
Billings
in excess of costs
|
(156,580 | ) | ||
Line
of credit
|
(400,000 | ) | ||
Income
tax payable
|
(240,000 | ) | ||
Deferred
tax liability
|
(15,444 | ) | ||
Notes
payable
|
(47,024 | ) | ||
Shareholder
loan
|
(168,365 | ) | ||
(2,515,479 | ) | |||
Purchase
price
|
$ | 1,856,029 |
Assets
purchased:
|
||||
Cash
|
231,386 | |||
Accounts
receivable
|
312,135 | |||
Prepaid
expenses
|
23,881 | |||
Costs
in excess of billings
|
26,271 | |||
Fixed
assets
|
103,951 | |||
Other
assets
|
830 | |||
Goodwill
and other intangibles
|
820,818 | |||
1,519,272 | ||||
Liabilities
assumed:
|
||||
Accounts
payable
|
(26,287 | ) | ||
Accrued
expenses
|
(74,510 | ) | ||
Payroll
and other payable
|
(9,409 | ) | ||
Loan
payable
|
(6,099 | ) | ||
Sales
and use tax payable
|
(40,516 | ) | ||
Income
tax payable
|
(216,826 | ) | ||
(373,647 | ) | |||
Purchase
price
|
1,145,625 |
Consolidated
Pro Forma
|
||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
January
31,
|
January
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenues
|
$ | 25,010,045 | $ | 27,078,764 | $ | 84,499,454 | $ | 81,704,027 | ||||||||
Net
income
|
431,940 | 1,509,217 | 3,506,184 | 5,244,918 | ||||||||||||
Basic
weighted common shares
|
7,093,662 | 5,852,865 | 7,101,533 | 5,817,434 | ||||||||||||
Diluted
weighted common shares
|
7,801,597 | 6,628,363 | 8,003,979 | 6,373,747 | ||||||||||||
Basic
net income per common share
|
$ | 0.06 | $ | 0.26 | $ | 0.49 | $ | 0.90 | ||||||||
Diluted
net income per common share
|
$ | 0.06 | $ | 0.23 | $ | 0.44 | $ | 0.82 |
January
31,
2008
|
April
30,
2007
|
|||||||
Costs
incurred on uncompleted contracts
|
$ | 62,945,703 | $ | 39,431,006 | ||||
Estimated
contract profit
|
20,793,056 | 12,513,277 | ||||||
83,738,759 | 51,944,283 | |||||||
Less:
billings to date
|
81,819,376 | 51,717,031 | ||||||
Net
excess of costs
|
$ | 1,919,383 | $ | 227,252 | ||||
Costs
and estimated earnings in excess of billings
|
$ | 4,599,455 | $ | 2,499,940 | ||||
|
||||||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
(2,680,072 | ) | (2,272,688 | ) | ||||
Net
excess of costs
|
$ | 1,919,383 | $ | 227,252 |
Nine
Months Ended
|
||||||||
January
31,
|
||||||||
2008
|
2007
|
|||||||
Risk-free
interest rate
|
4.31%
to 4.74%
|
4.73%
to 4.96%
|
||||||
Expected
volatility
|
57.0%
to 58.3%
|
61.0%
to 62.4%
|
||||||
Expected
dividend yield
|
0.00% | 0.00% | ||||||
Expected
term (in years)
|
3.5 | 3.5 |
2002
Plan
|
2006
Plan
|
|||||||||||||||||||||||||||||||
Number
of Shares
|
Weighted-average
Exercise Price
|
Weighted-
average Remaining Contractual Term
|
Aggregate
Intrinsic
Value
|
Number
of Shares
|
Weighted-average
Exercise Price
|
Weighted-average
Remaining Contractual Term
|
Aggregate
Intrinsic Value
|
|||||||||||||||||||||||||
Outstanding,
May 1, 2007
|
233,575 | $ | 8.43 | 327,259 | $ | 6.22 | ||||||||||||||||||||||||||
Granted
|
9,200 | $ | 10.95 | 6,000 | $ | 12.10 | ||||||||||||||||||||||||||
Exercised
|
(4,498 | ) | $ | 5.76 | (5,333 | ) | $ | 6.65 | ||||||||||||||||||||||||
Forfeited/Expired
|
(6,268 | ) | $ | 13.75 | (1,200 | ) | $ | 7.23 | ||||||||||||||||||||||||
Outstanding,
January 31, 2008
|
232,009 | $ | 8.44 | 1.5 | $ | 257,049 | 326,726 | $ | 6.31 | 2.8 | $ | 636,686 | ||||||||||||||||||||
Vested
and expected to vested,
January
31, 2008
|
229,650 | $ | 8.43 | 1.4 | $ | 256,296 | 325,091 | $ | 6.29 | 2.8 | $ | 636,213 | ||||||||||||||||||||
Exercisable,
January 31, 2008
|
215,097 | $ | 8.38 | 1.3 | $ | 249,893 | 313,900 | $ | 6.17 | 2.7 | $ | 632,622 |
For
Three Months Ended January 31, 2008
|
For
Three Months Ended January 31, 2007
|
|||||||||||||||||||||||||||||||
Corporate
|
Wireless
Infrastructure
|
Specialty
Communication
|
Total
|
Corporate
|
Wireless Infrastructure
|
Specialty Communication
|
Total
|
|||||||||||||||||||||||||
Revenue
|
$ | - | $ | 2,800,380 | $ | 22,001,699 | $ | 24,802,079 | $ | - | $ | 3,012,031 | $ | 15,109,374 | $ | 18,121,405 | ||||||||||||||||
Depreciation
and amortization
|
$ | 8,309 | $ | 58,983 | $ | 550,710 | $ | 618,002 | $ | 13,917 | $ | 75,724 | $ | 220,433 | $ | 310,074 | ||||||||||||||||
Income
(loss) before income taxes
|
$ | (528,127 | ) | $ | (151,500 | ) | $ | 1,315,631 | $ | 636,004 | $ | (431,438 | ) | $ | 42,043 | $ | 2,519,736 | $ | 2,130,341 | |||||||||||||
As
of and for the Nine Months Ended January 31, 2008
|
As
of and for the Nine Months Ended January 31, 2007
|
|||||||||||||||||||||||||||||||
Corporate
|
Wireless
Infrastructure
|
Specialty
Communication
|
Total
|
Corporate
|
Wireless Infrastructure
|
Specialty Communication
|
Total
|
|||||||||||||||||||||||||
Revenue
|
$ | - | $ | 9,394,315 | $ | 65,328,814 | $ | 74,723,129 | $ | - | $ | 9,427,000 | $ | 42,883,727 | $ | 52,310,727 | ||||||||||||||||
Depreciation
and amortization
|
$ | 27,720 | $ | 193,381 | $ | 1,395,103 | $ | 1,616,204 | $ | 42,760 | $ | 200,749 | $ | 637,456 | $ | 880,965 | ||||||||||||||||
Income
(loss) before income taxes
|
$ | (1,809,475 | ) | $ | 599,050 | $ | 6,342,741 | $ | 5,132,316 | $ | (1,439,989 | ) | $ | 585,171 | $ | 6,175,416 | $ | 5,320,598 | ||||||||||||||
Goodwill
|
$ | - | $ | 4,582,176 | $ | 19,384,631 | $ | 23,966,807 | $ | - | $ | 4,294,631 | $ | 14,724,821 | $ | 19,019,452 | ||||||||||||||||
Total
assets
|
$ | 1,557,930 | $ | 11,546,354 | $ | 63,335,226 | $ | 76,439,510 | $ | 12,955,887 | $ | 10,511,580 | $ | 38,696,476 | $ | 62,163,943 |
·
|
For
the nine months ended January 31, 2008, the specialty communication
systems segment represented approximately 87% of total revenue, and the
wireless infrastructure services segment represented approximately 13%.
This revenue mix remains consistent with our historical performance and
focus, in which over 80% of our total revenue has been derived from
specialty communication systems.
|
·
|
As
we continue to search for acquisitions, our primary goal is to identify
companies which are performing well financially, that expand our customer
base and are compatible with the services that we perform in the specialty
communication systems segment. This trend could lead to a further shift in
our revenue composition towards the specialty communication systems
segment. We believe that the strength of our experience in the design
and deployment of specialty communication systems gives us a competitive
advantage.
|
|
·
|
With
regard to our acquisition strategy, we are also focused on expanding in
the international sector with an emphasis on China, Australia and
surrounding Pacific Rim countries. This trend could lead to a
change of revenue composition in which as much as 50% of our revenue could
be generated from international sales in the
future.
|
·
|
We
also seek to achieve organic growth in our existing business by maximizing
the value of our existing customer base, maintaining and expanding our
focus in vertical markets and developing our relationships with technology
providers.
|
·
|
We
believe that the wireless market continues to display strong growth and
the demand for our engineering services remains favorable domestically and
in China and Australia, particularly in public safety and
healthcare. We believe that the advancement of wireless
technology will create additional opportunities for us to design and
deploy wireless solutions. Also, we continue to identify new vertical
sectors for wireless technology.
|
|
·
|
We
believe that our two most important economic indicators for measuring our
future revenue producing capability are our backlog and bid
list. At January 31, 2008, our backlog of unfilled orders was
approximately $67 million and our bid list, which represents project bids
under proposal for new and existing customers, was approximately $129
million, which are at their highest levels historical, and indicates that
demand for our services remains high. By comparison, our backlog and bid
list was approximately $36 million and $125 million respectively, at
October 31, 2007.
|
·
|
In
general, we plan for our consolidated cost of revenue to fall in the range
of 70 to 72% of revenue. For the nine months ended January 31,
2008, consolidated cost of revenue was 72% compared to 69% for the same
period in the prior year. We are experiencing modest gross
margin pressure compared to the same period in the prior year due to:
(1) the subprime credit issues and the lack of residential housing
projects, where in certain markets there are a growing number of
general contractors competing for non-wireless projects and bidding down
prices. While we are primarily focused on the high-end wireless design and
deployment market, we have a modest exposure to this type of low-end
contracting work; and (2) delays or postponements of certain projects with
wireless carriers, resulting in contractors bidding down prices on
remaining work. Management is addressing these issues through
continued focus and diversification to specialty communication systems
projects.
|
·
|
We
continue to maintain a healthy balance sheet with approximately $27
million in working capital and credit facility borrowings of only
approximately $1.2 million. We expect to use our working
capital and availability under the credit facility to fund our continued
growth.
|