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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
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 number 000-7336
RELM WIRELESS CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 59-3486297
State or other jurisdiction of (I.R.S. Employer
Incorporation or organization Identification No.)
7100 Technology Drive
West Melbourne, Florida 32904
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (321) 984-1414
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 is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
There were 12,861,008 shares of common stock, $0.60 par value, of the
registrant outstanding at July 15, 2004.
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PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RELM WIRELESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (Unaudited)
JUNE 30, December 31,
2004 2003
-------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 5,005 $ 1,293
Trade accounts receivable (net of allowance for doubtful
accounts of $92 in 2004 and $61 in 2003) 3,049 2,880
Inventories, net 5,272 5,698
Prepaid expenses and other current assets 235 374
-------- --------
Total current assets 13,561 10,245
Property, plant and equipment, net 1,359 1,468
Debt issuance costs, net 85 171
Other assets 301 345
-------- --------
Total assets $ 15,306 $ 12,229
======== ========
See notes to condensed consolidated financial statements.
1
RELM WIRELESS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (Unaudited)
JUNE 30, December 31,
2004 2003
-------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 2,950 $ 3,150
Accounts payable 1,142 891
Accrued compensation and related taxes 491 547
Accrued warranty expense 104 82
Accrued other expenses and other current liabilities 304 302
-------- --------
Total current liabilities 4,991 4,972
Long-term debt -- 1,272
Commitments and Contingencies
Stockholders' equity:
Preferred stock; $1.00 par value; 1,000,000 authorized shares
none issued or outstanding -- --
Common stock; $.60 par value; 20,000,000 authorized shares:
12,861,008 and 9,073,085 issued and outstanding shares at
June 30, 2004 and December 31, 2003, respectively 7,716 5,443
Additional paid-in capital 22,798 21,482
Accumulated deficit (20,199) (20,940)
-------- --------
Total stockholders' equity 10,315 5,985
-------- --------
Total liabilities and stockholders' equity $ 15,306 $ 12,229
======== ========
See notes to condensed consolidated financial statements.
2
RELM WIRELESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data) (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
JUNE 30, June 30, JUNE 30, June 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(SEE NOTE 1) (see note 1) (SEE NOTE 1) (see note 1)
Sales $ 4,947 $ 5,231 $ 9,918 $ 8,827
Expenses
Cost of products 2,612 3,466 5,484 5,985
Selling, general & administrative 1,875 1,546 3,565 2,912
------- ------- ------- -------
4,487 5,012 9,049 8,897
------- ------- ------- -------
Operating income (loss) 460 219 869 (70)
Other income (expense):
Interest expense (67) (119) (145) (222)
Other income 8 22 17 38
------- ------- ------- -------
Net income (loss) $ 401 $ 122 $ 741 $ (254)
======= ======= ======= =======
Earnings (loss) per share-basic $ 0.04 $ 0.01 $ 0.07 $ (0.03)
======= ======= ======= =======
Earnings (loss) per share-diluted $ 0.03 $ 0.01 $ 0.07 $ (0.03)
======= ======= ======= =======
See notes to condensed consolidated financial statements.
3
RELM WIRELESS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
SIX MONTHS ENDED
----------------------------
JUNE 30, JUNE 30,
2004 2003
------------ ------------
(SEE NOTE 1) (see note 1)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 741 $ (254)
Adjustments to reconcile net income (loss) to net cash provided by
(used in ) operating activities:
Allowance for doubtful accounts 32 (1)
Depreciation and amortization 326 332
Change in current assets and liabilities:
Accounts receivable (201) (2,161)
Inventories 426 1,257
Accounts payable 251 (662)
Prepaid expenses and other current assets 139 211
Other assets 44 (361)
Accrued compensation and related taxes (56) (44)
Accrued warranty expense 22 (3)
Accrued other expenses and other liabilities (2) 26
------- -------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,722 (1,660)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (127) (60)
------- -------
CASH USED IN INVESTING ACTIVITIES (127) (60)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) in revolving credit lines (1,272) 932
Proceeds from issuance of common stock 3,389 11
------- -------
CASH PROVIDED BY FINANCING ACTIVITIES 2,117 943
Increase (decrease) in cash and cash equivalents 3,712 (777)
Cash and cash equivalents, beginning of period 1,293 1,631
------- -------
Cash and cash equivalents, end of period $ 5,005 $ 854
======= =======
SUPPLEMENTAL DISCLOSURE
Interest paid $ 145 $ 222
======= =======
NON-CASH FINANCING ACTIVITY
Conversion of notes to stockholders' equity $ 200 $ --
======= =======
See notes to condensed consolidated financial statements.
4
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet as of June 30, 2004, the condensed
consolidated statements of operations for the three and six months ended June
30, 2004 and 2003 and the condensed consolidated statements of cash flows for
the six months ended June 30, 2004 and 2003 have been prepared by RELM Wireless
Corporation (the Company), and are unaudited. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary for a fair
presentation have been made. The condensed consolidated balance sheet at
December 31, 2003 has been derived from the audited consolidated financial
statements at that date.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2003.
The results of operations for the three and six months ended June 30, 2004 are
not necessarily indicative of the operating results for a full year.
2. SIGNIFICANT EVENTS AND TRANSACTIONS
In June 2004, the Company redeemed all of its outstanding public warrants to
purchase common stock. Prior to completion of the redemption, approximately 99.4
percent of the public warrants were exercised, generating net proceeds to the
Company of approximately $3.4 million and resulting in the issuance of 3,669,039
shares of the Company's common stock. Any public warrant or certificate
representing a public warrant is no longer in force or effect. The redemption
concluded the Company's 2002 public rights offering.
From March 2002 through June 2004 the offering generated approximately $5.5
million in total net proceeds, and resulted in the issuance of 6,860,289 shares
of RELM common stock. The offering originated in March 2002, and the securities
offered were "units." A unit was comprised of one share of RELM common stock and
one public warrant to purchase one share of RELM common stock. Units were
offered initially to RELM's equity holders in the form of a rights offering. The
"right" allowed investors in the offering to purchase units at a 10 percent
discount to the market price of a share of common stock. The public warrant
component gave investors the opportunity to buy the Company's shares at a later
date at a fixed price, and provided the opportunity for the Company to realize
additional capital upon their exercise. On April 30, 2004, the Company announced
the redemption of the public warrants. The public warrants, with an exercise
price of $1.05, were exercisable for one share of common stock until 5:00 p.m.
(New York time) on May 30, 2004. After that date, the warrants were no longer
exercisable, and holders had the right to receive only the redemption price of
$0.10 per warrant.
5
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
3. ALLOWANCE ON TRADE RECEIVABLES
The allowance for collection losses on trade receivables was approximately $92
on gross trade receivables of $3,141 at June 30, 2004. This allowance is used to
state trade receivables at a net realizable value or the amount that the Company
estimates will be collected on the Company's gross receivables as of June 30,
2004. Because the amount that the Company will actually collect on the
receivables outstanding as of June 30, 2004 cannot be known with certainty, the
Company relies on prior experience. The Company's historical collection losses
have typically been infrequent with write-offs of trade receivables being less
than 1% of sales. The Company maintains a general allowance of approximately 1%
to 5% of the gross trade receivables balance in order to allow for future
collection losses that arise from customer accounts that do not indicate the
inability to pay but turn out to have such an inability. Currently, the
Company's allowance on trade receivables is approximately 3% of gross trade
receivables. The Company may also maintain a specific allowance for customer
accounts that the Company knows may not be collectible due to reasons such as
bankruptcy and other customer liquidity issues. The Company analyzes the trade
receivable portfolio based on the age of each customer's invoice. In this way,
the Company can identify those accounts that are more likely than not to have
collection problems. The Company may reserve a portion or all of the customer's
balance. As of June 30, 2004, there was a specific allowance of approximately
$36.
4. INVENTORIES
The components of inventory, net of reserves totaling $2,802 at June 30, 2004
and December 31, 2003, respectively, consist of the following:
JUNE 30, December 31,
2004 2003
------- ------------
Finished goods $2,662 $3,052
Work in process 523 743
Raw materials 2,087 1,903
------ ------
$5,272 $5,698
====== ======
6
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
The reserve for slow-moving, excess, or obsolete inventory is used to state the
Company's inventories at the lower of cost or market. Because the amount of
inventory that the Company will actually recoup through sales of its inventory
as of June 30, 2004 cannot be known with certainty, the Company relies on past
sales experience, future sales forecasts, and its strategic business plans to
determine the amount of the reserve. Generally, in analyzing inventory, the
Company classifies it as having been used or unused during the past year. For
raw material inventory with no usage in the past year, the Company reserves 85%
of its cost which takes into account a 15% scrap value while for finished goods
inventory with no usage in the past year the Company reserves 80% of its cost.
For inventory with usage in the past year, the Company reviews the average
annual usage over the past three years, projects that amount over the next five
years, and then reserves 25% of the excess amount (in which the excess amount
equals inventory on hand less a five year projected usage amount). The Company
believes that 25% represents the value of excess inventory it would not be able
to recover due to new product introductions and other technological advancements
over the next five years. As of June 30, 2004, a portion of the Company's
inventory is in excess of optimal levels based upon historical sales volumes.
Certain new product development has been completed and marketing programs
implemented that have reduced this inventory, and will continue to reduce it
over the near term. No estimate can be made of a loss that is reasonably
possible should the programs not be successful.
5. CONVERTIBLE SUBORDINATED NOTES
The Company privately placed convertible subordinated notes on March 16, 2000.
During the six months ended June 30, 2004, certain of the notes were converted
into 106,384 shares of common stock. As a result of the conversions, the total
amount due under the notes was reduced by $200. The remaining outstanding notes
total $2,950 and are convertible into approximately 1.6 million shares of common
stock. The notes mature on December 31, 2004. Upon maturity the notes must be
repaid or converted into shares of common stock. The decision regarding
repayment or conversion is at the option of the note holder unless the market
price of our common stock exceeds $6.50 per share for 30 consecutive trading
days, at which time the Company could convert the notes into common stock or
repay them. The notes require interest only payments at 8% per annum through
December 31, 2004, at which time the principal amount becomes due. At the time
of issuance, the notes were convertible into shares of common stock at $3.25 per
share. The notes contain provisions that protect the purchasers of the notes
against dilution should the Company issue shares of common stock at a price less
than the notes' conversion price then in effect. These provisions provide for an
adjustment in the notes' conversion price and the number of shares into which
the notes may be converted. On two occasions, March 22, 2002 and August 29,
2003, the Company issued shares of stock at a price below the notes' conversion
price then in effect. Accordingly, the conversion price of the notes has been
adjusted to $1.88, which was the effective conversion price as of June 30, 2004.
7
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
6. INCOME TAXES
No tax provision has been recorded during the three and six months ended June
30, 2004 because the Company anticipates applying federal and state net
operating loss carryforwards against year-to-date taxable income.
The Company has federal and state net operating loss carryforward benefits of
approximately $32,765 and $16,783, respectively, at June 30, 2004. These net
operating loss carryforwards begin to expire in 2010.
In accordance with SFAS Statement No. 109, Accounting for Income Taxes,
valuation allowances are provided against deferred tax assets if, based on the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. The Company has evaluated its deferred
tax assets and does not believe that it has met the criteria for realizing their
value; therefore, it has established a valuation allowance for the entire amount
of its deferred tax assets, approximately $13,000, at June 30, 2004. The federal
and state net operating loss carryforwards could be subject to limitation if,
within any three year period prior to the expiration of the applicable
carryforward period, there is a greater than 50% change in ownership of the
Company.
7. STOCKHOLDERS' EQUITY
The consolidated changes in stockholders' equity for the six months ended June
30, 2004 are as follows:
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- ------ ---------- ----------- -------
Balance at December 31, 2003 9,073,085 $5,443 $21,482 $(20,940) $ 5,985
Common stock option exercise 12,500 8 4 -- 12
Common stock warrant exercise 3,669,039 2,201 1,176 -- 3,377
Note conversion 106,384 64 136 -- 200
Net income -- -- -- 741 741
---------- ------ ------- -------- -------
Balance at June 30, 2004 12,861,008 $7,716 $22,798 $(20,199) $10,315
========== ====== ======= ======== =======
8
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
8. EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings
(loss) per share:
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- -----------------------------
JUNE 30 June 30 JUNE 30 June 30
2004 2003 2004 2003
----------- ---------- ----------- -----------
Numerator:
Net income (loss) (numerator for basic and
diluted earnings (loss) per share) $ 401 $ 122 $ 741 $ (254)
----------- ---------- ----------- -----------
Denominator:
Denominator for basic earnings per share
weighted average shares 11,050,481 8,565,088 10,149,603 8,558,560
Effect of dilutive securities:
Options 547,663 -- 543,139 --
Underwriter's Warrants 187,667 -- 182,524 --
Denominator:
Denominator for diluted earnings per share
weighted average shares 11,785,811 8,565,088 10,875,316 8,558,560
Basic earnings (loss) per share $ 0.04 $ 0.01 $ 0.07 $ (0.03)
=========== ========== =========== ===========
Diluted earnings (loss) per share $ 0.03 $ 0.01 $ 0.07 $ (0.03)
=========== ========== =========== ===========
A total of 1,569,148 shares related to convertible debt are not included in the
computation of earnings per share for the three and six months ended June 30,
2004, respectively; and a total of 3,809,503 shares related to options,
warrants and convertible debt are not included in the computation of earnings
(loss) per share for the three and six months ended June 30, 2003, respectively,
because to do so would have been antidilutive for these periods.
9
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
9. STOCK BASED COMPENSATION
The Company has elected to continue to account for its stock-based compensation
plans under Accounting Principles Board (APB) Opinion 25, "Accounting for Stock
Issued to Employees" and related interpretations. No compensation cost is
reflected in the Company's net income (loss) related to the stock option plans
for the periods presented, as all options had an exercise price greater than or
equal to the market value of the underlying common stock on the date of grant.
Had the expense for the stock-based compensation been determined using the fair
value based method defined in Financial Accounting Standard (FAS) 123,
"Accounting for Stock-Based Compensation & Financial Accounting Standard (FAS)
148 "Accounting for Stock Based Corporation, Transition and Disclosure, an
amendment of FASB Statement No. 123," the Company's net earnings (loss) and net
earnings (loss) per share would have been reduced to the pro forma amounts
indicated below:
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
2004 2003 2004 2003
----------- -------- ------------ -------
Net income (loss) as reported $ 401 $ 122 $ 741 $ (254)
Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects (33) (26) (54) (53)
Pro forma net income (loss) $ 368 $ 96 $ 687 $ (307)
=========== ======== ============ =======
Basic earnings (loss) per share:
As reported $ 0.04 $ 0.01 $ 0.07 $ (0.03)
=========== ======== ============ =======
Pro forma $ 0.03 $ 0.01 $ 0.07 $ (0.04)
=========== ======== ============ =======
Diluted earnings (loss) per share:
As reported $ 0.03 $ 0.01 $ 0.07 $ (0.03)
=========== ======== ============ =======
Pro forma $ 0.03 $ 0.01 $ 0.06 $ (0.04)
=========== ======== ============ =======
These pro forma results may not be indicative of the future results for the full
fiscal year due to potential grants vesting and other factors.
10
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 2003 and 2004, respectively: risk-free interest
rates of 4.625% and 2.75%; dividend yields of 0%; volatility factors of the
expected market price of the common stock of 99.347% and 108.8%; and a
weighted-average expected life of the option of four years.
10. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may become liable with respect to pending and
threatened litigation, tax, environmental and other matters.
LEGAL PROCEEDINGS
In 1993, a civil action was brought against the Company by a plaintiff to
recover losses sustained on the note of a former affiliate totaling $1,700 plus
interest at 12% per annum. The plaintiff alleged violations of federal security
and other laws by the Company in collateral arrangements with the former
affiliate. In February 1994, the liquidator of the former affiliate filed a
complaint claiming that intentional and negligent conduct by the Company and
others caused the former affiliate to suffer millions of dollars of losses
leading to its ultimate failure. In response, the Company filed motions for
summary judgment to dismiss these complaints. On September 12, 2002, the Court
granted in significant part the motions for summary judgment filed by the
Company and one of the Company's directors. The lone remaining claim sought
damages against the Company for non-payment of the note. The Company contended
that this note was canceled and released for fair consideration in 1993 and that
there was no basis in law or fact for the liquidator's claim. On March 1, 2004,
the Company reached a settlement agreement. Under the terms of the settlement,
the Company will pay to the plaintiff cash totaling $120,000 and issue 6,452
shares of restricted common stock valued at the closing price on March 1, 2004.
Consequently, the Company recognized a one-time charge of $140,000 in the fourth
quarter 2003. The settlement is subject to the execution by both parties of a
written agreement and release.
In June 1997, substantially all of the assets of a RELM specialty-manufacturing
subsidiary were sold. The asset purchase agreement contains indemnification
provisions, which could result in liability for both parties. Presently, one
indemnification claim is pending against the Company. On November 19, 2001, a
products liability lawsuit was filed in the 353rd Judicial District Court of
Travis County, Texas. On August 26, 2002, a products liability lawsuit was filed
in the Probate Court of Galveston County, Texas. RELM Wireless Corporation, RELM
Communications, Incorporated, and the purchaser of the assets of our former
specialty-manufacturing subsidiary are named defendants in these lawsuits. The
11
Notes to Condensed Consolidated Financial Statements (continued)
Unaudited
(in Thousands, Except Share Data and Percentages)
Company has insurance coverage for these matters. The initial case was settled
in February 2004 by the insurance companies involved, including ours. The
Company did not incur any costs or liabilities related to the settlement.
Counsel for the Company's insurer is continuing to vigorously defend the
remaining claim. Counsel believes we have meritorious defenses and the
likelihood of an unfavorable outcome is remote.
The Company is involved in various claims and legal actions arising in the
ordinary course of its business. For a description of other pending legal
proceedings, reference is made to the Company's Annual Report on Form 10-K for
the year ended December 31, 2003. It is the opinion of management that the
ultimate disposition of these matters would not have a material effect upon the
Company's consolidated financial position or results of operations.
OTHER
As of June 30, 2004, the Company has commitments for purchase orders of
approximately $2,634.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SPECIAL NOTE CONCERNING
FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our
security holders and to the public. This report, therefore, contains statements
about future events and expectations which are "forward-looking statements"
within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including the statements about our plans,
objectives, expectations and prospects under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations." You
can expect to identify these statements by forward-looking words such as "may,"
"might," "could," "would," "anticipate," "believe," "plan," "estimate,"
"project," "expect," "intend," "seek" and other similar expressions. Any
statement contained in this report that is not a statement of historical fact
may be deemed to be a forward-looking statement. Although we believe that the
plans, objectives, expectations and prospects reflected in or suggested by our
forward-looking statements are reasonable, those statements involve risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements, and we
can give no assurance that our plans, objectives, expectations and prospects
will be achieved.
Important factors that might cause our actual results to differ materially from
the results contemplated by the forward-looking statements are contained in the
"Risk Factors" section of and elsewhere in our Annual Report on Form 10-K for
the year ended December 31, 2003 and in our future filings with the Securities
and Exchange Commission, and include, among others, the following:
o substantial losses incurred by us prior to 2003;
o changes in customer preferences;
o our inventory and debt levels;
o heavy reliance on sales to the U.S. Government;
o federal, state and local government budget deficits and spending
limitations;
o quality of management, business abilities and judgment of our
personnel;
o the availability, terms and deployment of capital;
o competition in the land mobile radio industry;
o reliance on overseas manufacturers;
o limitations in available radio spectrum for use of land mobile
radios;
o changes or advances in technology; and
o general economic and business conditions.
We assume no obligation to publicly update or revise
any forward-looking statements made in this report, whether as a result of new
information, future events, changes in assumptions or otherwise, after the date
of this report.
13
EXECUTIVE SUMMARY
Our operating results for the three and six months ended June 30, 2004 improved
significantly compared to the same period last year. Although sales for the
three months ended June 30, 2004 decreased approximately 5.4% compared to the
same period last year, year-to-date sales for the six months ended June 30, 2004
increased approximately 12.4%. Our gross margin percentage for the three and six
months ended June 30, 2004 was 47.2% and 44.7%, respectively. Compared to the
same periods for the prior year, this margin performance represents a 32%
improvement for the three months ended June 30, 2004 and a 56% improvement for
the six months ended June 30, 2004. Net income for the three months ended June
30, 2004 was $401,000, or $0.03 per diluted share compared to net income of
$122,000, or $0.01 per diluted share for the same period last year. For the six
months ended June 30, 2004, net income totaled $741,000, or $0.07 per diluted
share compared to a net loss of ($254,000), or ($0.03) per diluted share for the
same period last year.
Sales of new products, such as our digital Project 25-compliant portable radio
used by government and public-safety agencies and our RP-Series analog radios
targeted for commercial and industrial applications, increased during the second
quarter and for the year-to-date compared to the same period last year and
compared to the first quarter this year. The growth continues to be realized
from a steady increase in customer orders, rather than from a few large orders.
The improved volume of customer orders has been broad-based, with much of it
coming from new customers and customers that are returning after several years.
More new product additions are planned for later this year and next year. Sales
of conventional analog products declined for the second quarter and year-to-date
as some government and public safety users migrated to newer products,
particularly those featuring digital technology.
Gross margins improved as we continued to expand our use of contract
manufacturers, successfully reducing manufacturing support costs while improving
manufacturing efficiencies and inventory management. Also, our new products
incorporate recent, more cost-effective product designs.
Selling, general and administrative ("SG&A") expenses increased as we expanded
our new product development and sales and marketing initiatives. With the
additional investment in these areas, we expect to speed the completion and
introduction of new products, including additional Project-25 digital products,
and drive sales growth.
For the year-to-date, additional cash totaling approximately $3.4 million was
generated from the exercise of our public stock purchase warrants. We issued
3,669,039 shares of common stock associated with the warrant exercises. Among
other things, the additional cash resources will be used to fund new product
development and sales and marketing initiatives. Also, certain of our
subordinated convertible notes were converted into common stock during the first
quarter of 2004, reducing the amount due on the notes by $200,000 to $2.95
million. Our cash balances as of June 30, 2004 totaled approximately $5.0
million.
In February 2004, our primary lender increased our revolving line of credit by
$1 million and extended the maturity date to January 1, 2005.
14
RESULTS OF OPERATIONS
The following table shows each item from the condensed consolidated statements
of operations expressed as a percentage of sales:
PERCENTAGE OF SALES PERCENTAGE OF SALES
------------------- -------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 June 30 JUNE 30 June 30
2004 2003 2004 2003
----- ----- ----- -----
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 52.8 66.3 55.3 67.8
----- ----- ----- -----
Gross margin 47.2% 33.7% 44.7 32.2
Selling, general and
administrative expenses (37.9) (29.5) (35.9) (33.0)
Interest expense (1.3) (2.3) (1.5) (2.5)
Other income 0.0 0.4 0.2 0.4
----- ----- ----- -----
Net income (loss) 8.0% 2.3% 7.5% (2.9)%
===== ===== ===== =====
NET SALES
Net sales for the three months ended June 30, 2004 decreased approximately $0.3
million (5.8%) to approximately $4.9 million from approximately $5.2 million for
the same period last year.
Net sales for the six months ended June 30, 2004 increased approximately $1.1
million (12.5%) to approximately $9.9 million from approximately $8.8 million
for the same period last year.
Sales from new product introductions for both of our market segments (government
and public safety, and business and industrial) increased approximately $1.8
million and $3.5 million for the three and six months ended June 30, 2004,
respectively, compared to the prior periods last year. This includes sales of
our BK Radio-brand digital products that are compliant with the APCO Project 25
standard and sold principally to agencies of federal, state and local
governments, as well as sales of RELM-brand products sold to business and
commercial concerns. These products were introduced at various times during
2003. Sales of conventional analog products decreased approximately $2.1 million
(45.2%) and $2.4 million (31.1%) for the three and six months ended June 30,
2004, respectively, compared to the prior periods last year, as users migrated
to newer, more feature-rich products, in some cases with Project 25-compliant
digital technology. Additional new products are planned for introduction this
year and in 2005. We believe these planned new products combined with the new
products that have already been introduced will result in the growth of total
sales.
15
COST OF SALES AND GROSS MARGIN
Cost of sales as a percentage of sales for the three months ended June 30, 2004
decreased to 52.8% from 66.3% for the same period last year. Cost of sales as a
percentage of sales for the six months ended June 30, 2004 decreased to 55.3%
from 67.8% for the same period last year.
We have continued to expand our use of contract manufacturers. All of our
products are now largely manufactured using such resources. Our contract
manufacturing relationships have helped improve our production efficiencies and
reduce material and labor costs. They have also enabled us to reduce internal
manufacturing support expenses. Increased sales volumes have enabled us to more
fully utilize and absorb the reduced base of manufacturing support expenses. As
volumes increase, we believe additional efficiencies and cost reductions can be
realized. We continuously evaluate manufacturing alternatives to improve quality
and reduce our product costs. We anticipate that the current contract
manufacturing relationships or comparable alternatives will be available to us
in the future.
The mix of products in our total sales has also contributed to improved margins.
Sales of higher-specification products to government and public-safety customers
have comprised a greater portion of our total sales for the six months ended
June 30, 2004 compared to the same period last year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative ("SG&A") expenses consist of marketing,
sales, commissions, engineering, development, management information systems,
accounting and headquarters expenses. For the three months ended June 30, 2004,
SG&A expenses totaled approximately $1.9 million (37.9% of sales) compared to
approximately $1.5 million (29.5% of sales) for the same period last year. For
the six months ended June 30, 2004, SG&A expenses totaled approximately $3.6
million (35.9% of sales) compared to approximately $2.9 million (33.0% of sales)
for the same period last year.
The overall increase in SG&A expenses is attributed primarily to increases in
product development and engineering, selling and marketing initiatives and
certain headquarters expenses.
Product development staff and expenses increased by approximately $111,000
(31.6%) and $141,000 (20.3%), respectively, for the three and six months ended
June 30, 2004 compared to the same period last year. This expansion is intended
to speed the completion and introduction of new products, including additional
APCO Project-25 digital products. Bringing such products to market and achieving
a significant share of the market will continue to require substantial
investment to complete development and to achieve market penetration. Our
internal development efforts are focused entirely on our digital product
program. This program is planned to yield approximately 17 products through
2005. We anticipate that these products will be the main source of sales growth
in the future.
Marketing and sales expenses increased by approximately $136,000 (21.3%) and
$325,000 (27.8%), respectively, for the three and six months ended June 30, 2004
16
compared to the same period last year. We expanded our sales staff and incurred
additional marketing and promotion expenses for initiatives designed to drive
revenue growth, particularly from government and public safety opportunities for
digital Project 25-compliant products. Sales commissions as a percent of sales
decreased in both the first and second quarter as a greater portion of our sales
were made through direct channels, partially offsetting the additional staff and
expenses.
General and administrative expenses increased by approximately $82,000 (14.8%)
and $187,000 (17.9%), respectively, for the three and six months ended June 30,
2004 compared to the same period last year. The increase was largely the result
of certain professional fees, including legal fees related to the settlement of
a civil action that was originated in 1993 (see footnote 11 to our condensed
consolidated financial statements included elsewhere in this report). Also,
during the first quarter of 2004 a collection allowance of approximately $36,000
related to a specific customer receivable was established.
OPERATING INCOME (LOSS)
Operating income for the three months ended June 30, 2004 was approximately
$460,000 compared to $219,000 for the same period last year. Operating income
for the six months ended June 30, 2004 was approximately $869,000 compared to an
operating loss of approximately ($70,000) for the same period last year.
INTEREST EXPENSE
For the three months ended June 30, 2004, interest expense decreased by
approximately $52,000 (43.7%) to $67,000 from $119,000 for the same period last
year. For the six months ended June 30, 2004, interest expense decreased by
approximately $77,000 (34.7%) to $145,000 from $222,000 for the same period last
year. We incur interest expense on our revolving line of credit and our
subordinated convertible notes. The interest rate on our revolving line of
credit is variable and will fluctuate with the prime lending rate. The interest
rate on the convertible notes is 8% per annum. The effective interest rate on
our current revolving line of credit for the six months ended June 30, 2004,
which was established in August 2003, was lower compared to the effective
interest rate on the previous credit facility that was in place during the same
period last year. Also, primarily as a result of cash generated from improved
operations and warrant exercises, the outstanding principal balance on the
revolving line of credit was lower during the three and six months ended June
30, 2004 compared to the balance on the previous credit facility that was in
place during the same period last year.
INCOME TAXES
No income tax provision was provided for the three or six months ended June 30,
2004. We have federal and state net operating loss carryforward benefits of
approximately $32,765,000 and $16,783,000, respectively, at June 30, 2004. These
net operating loss carryforwards begin to expire in 2010.
In accordance with SFAS Statement No. 109, Accounting for Income Taxes,
valuation allowances are provided against deferred tax assets if, based on the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. We have evaluated our deferred tax
17
assets and do not believe that we have met the criteria for realizing their
value; therefore we have established a valuation allowance for the entire amount
of our deferred tax assets, approximately $13 million, at June 30, 2004. The
federal and state net operating loss carryforwards could be subject to
limitation if, within any three year period prior to the expiration of the
applicable carryforward period, there is a greater than 50% change in ownership
of RELM.
SIGNIFICANT CUSTOMERS
Sales to the United States government represented approximately $1.82 million
(36.8%) of our total sales for the three months ended June 30, 2004, compared to
approximately $2.24 million (42.8%) for the same period last year. For the six
months ended June 30, 2004, sales to the United States government represented
approximately $4.1 million (41.4%) of our total sales, compared to approximately
$3.70 million (41.9%) for the same period last year.
These sales were primarily to the United States Forest Service and the Unites
States Department of the Interior.
INFLATION AND CHANGING PRICES
Inflation and changing prices for the three and six months ended June 30, 2004
have contributed to increases in certain costs. These inflationary effects were
more than offset by increases in sales of higher priced products and reduced
manufacturing costs associated with our initiatives to utilize low-cost contract
manufacturers.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 2004, net cash provided by operating
activities totaled approximately $1.7 million compared to net cash used in
operating activities of approximately $1.7 million for the same period last
year. The increase in cash provided by operations is primarily attributable to
net income for the period of approximately $741,000 compared to a net loss of
approximately ($254,000) for the same period last year. Changes in components of
working capital, particularly inventory, accounts payable and accounts
receivable, also contributed to cash provided by operations.
Inventory decreased by approximately $426,000 as a result of improved sales from
items in existing inventory compared to an inventory reduction of approximately
$1.3 million during the same period last year. Accounts payable increased
approximately $251,000, compared to a reduction of approximately $662,000 for
the same period last year, as we continue to be successful in obtaining
increasingly favorable payment terms from suppliers. Sales growth during the
first six months of this year compared to the same period last year and extended
terms offered to certain customers increased accounts receivable by
approximately $201,000, compared to an increase of approximately $2.2 million
for the same period last year. Depreciation and amortization totaled
approximately $326,000 for the six months ended June 30, 2004, compared to
approximately $332,000 for the same period last year.
Cash used in investing activities was primarily to fund the acquisition of
equipment pertaining to our development of new digital products and computer
equipment for additional staff. Capital expenditures for the six months ended
18
June 30, 2004 were approximately $127,000 compared to approximately $60,000 for
the same period last year. No major capital expenditures are planned for the
remainder of 2004. We anticipate that future capital expenditures will be funded
through existing cash balances, operating cash flow and our revolving line of
credit.
Net cash totaling approximately $2.1 million was provided by financing
activities for the six months ended June 30, 2004, compared to approximately
$943,000 provided by those activities during the same period last year. During
the period, we repaid the entire balance, approximately $1.3 million, on our
revolving line of credit. During the same period last year, we borrowed
approximately $932,000 from our revolving line of credit. During the six months
ended June 30, 2004, we received approximately $3.4 million in net proceeds from
the exercise of our outstanding public warrants.
The credit agreement with our primary lender provides for a revolving line of
credit of up to $3.5 million with an expiration date of January 1, 2005. The
line is secured by substantially all of our assets, consisting principally of
our trade receivables and inventory. The credit agreement contains certain
covenants with which we must comply. As of June 30, 2004, we were in compliance
with all such covenants. We have approximately $2.9 million in available unused
credit on the facility as of June 30, 2004.
In June 2004, we redeemed all of our outstanding public warrants to purchase
common stock. Prior to completion of the redemption, approximately 99.4 percent
of the public warrants were exercised, generating net proceeds to us of
approximately $3.4 million and resulting in the issuance of 3,669,039 shares of
our common stock. The public warrants are no longer in force or effect. The
redemption concluded our 2002 public rights offering.
From March 2002 through June 2004 the offering generated approximately $5.5
million in total net proceeds, and resulted in the issuance of 6,860,289 shares
of our common stock. The offering originated in March 2002, and the securities
offered were "units." A unit was comprised of one share of our common stock and
one warrant to purchase one share of our common stock. Units were offered
initially to our equity holders in the form of a rights offering. The "right"
allowed investors in the offering to purchase units at a 10 percent discount to
the market price of a share of common stock. The warrant component gave
investors the opportunity to buy our shares at a later date at a fixed price,
and provided the opportunity for us to realize additional capital upon their
exercise. On April 30, 2004, we announced the redemption of the public warrants.
The public warrants, with an exercise price of $1.05, were exercisable for one
share of common stock until 5:00 p.m. (New York time) on May 30, 2004. After
that date, the warrants were no longer exercisable, and holders had the right to
receive only the redemption price of $0.10 per warrant.
During the six months ended June 30, 2004, certain of our convertible
subordinated notes were converted into 106,384 shares of common stock. As a
result of the conversions, the total amount due under the notes was reduced by
$0.2 million. The remaining outstanding notes total $2.95 million and are
convertible into approximately 1.6 million shares of common stock. The notes
mature on December 31, 2004. Upon maturity the notes must be repaid or converted
into shares of common stock. The decision regarding repayment or conversion is
at the option of the note holder unless the market price of our common stock
exceeds $6.50 per share for 30 consecutive trading days, at which time we could
convert the notes into shares of common stock or repay them. Although we cannot
be certain if the notes will be converted or repaid, we believe that there is a
19
reasonable prospect that the notes may be converted. If the notes must be
repaid, we believe that we will be able to do so by using existing cash funds,
cash generated from operations and borrowings under our credit facility.
Our cash balance at June 30, 2004 was approximately $5.0 million. We believe
these funds combined with cash generated from operations and borrowing
availability under our credit facility are sufficient to meet our current
working capital requirements for the next twelve months.
CONTRACTUAL OBLIGATIONS
The following table sets forth the Company's future contractual obligations for
the next five years and in the aggregate as of June 30, 2004:
(IN THOUSANDS)
- --------------------------------------------------------------------------------------------------------------------
PAYMENTS DUE BY PERIOD AS OF JUNE 30:
- --------------------------------------------------------------------------------------------------------------------
TOTAL 2004 2005 2006 2007 2008
- --------------------------------------------------------------------------------------------------------------------
Future minimum lease commitments $ 379 $ 208 $171 $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
Convertible subordinated notes $2,950 $2,950 $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
Revolving credit facility $ -- $ -- $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
Standby letters of credit $ 48 $ 48 $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
Purchase orders $2,634 $2,634 $ -- $ -- $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
CRITICAL ACCOUNTING POLICIES
In response to the SEC's financial reporting release, FR-60, Cautionary Advice
Regarding Disclosure About Critical Accounting Policies, we have selected for
disclosure our revenue recognition process and our more subjective accounting
estimation processes. These processes affect our reported revenues and current
assets and are therefore critical in assessing the financial and operation
status of the Company. The processes for determining the allowance for
collection of trade receivables and the reserves for excess or obsolete
inventory involve certain assumptions that if incorrect could create an adverse
impact on the Company's operations and financial position.
Revenue
Revenues are recognized when the earnings process is complete and collection is
reasonably assured. The earnings process is generally complete when the product
is shipped, or received by the customer, depending upon whether the title to the
goods, as well as the risks and benefits of ownership are transferred to the
customer at point of shipment or point of delivery. We periodically review our
revenue recognition procedures to assure that such procedures are in accordance
with accounting principles generally accepted in the United States.
Allowance For Collection Losses
The allowance for collection losses was approximately $92,000 on gross trade
receivables of approximately $3.1 million as of June 30, 2004. This allowance is
used to state trade receivables at a net realizable value or the amount that we
estimate will be collected on our gross receivables as of June 30, 2004. Because
20
the amount that we will actually collect on the receivables outstanding as of
June 30, 2004 cannot be known with certainty, we rely on prior experience. Our
historical collection losses have typically been infrequent with write-offs of
trade receivables being less than 1% of sales. We maintain a general allowance
of approximately 1% to 5% of the gross trade receivables balance in order to
allow for future collection losses that arise from customer accounts that do not
indicate the inability to pay but turn out to have such an inability. Currently,
our allowance on trade receivables is approximately 3% of gross receivables. We
may also maintain a specific allowance for customer accounts that we anticipate
may not be collectible for various reasons such as bankruptcy and other
liquidity issues. We analyze the trade receivable portfolio based on the age of
each customer's invoice. In this way, we can identify those accounts that are
more likely than not to have collection problems. Based on this analysis, we may
reserve a portion or all of a particular customer's balance. As of June 30,
2004, there was a specific allowance of approximately $36,000. We believe that
revenues and total receivables will increase during 2004, and accordingly, we
may experience an increase in this allowance balance.
Inventory Reserve
The reserve for slow-moving, excess, or obsolete inventory was $2.8 million at
June 30, 2004 and December 31, 2003. The reserve for excess or obsolete
inventory is used to state our inventories at the lower of cost or market.
Because the amount of inventory that we will actually recoup through sales of
our inventory as of June 30, 2004 cannot be known with certainty, we rely on
past sales experience, future sales forecasts, and our strategic business plans.
Generally, in analyzing our inventory levels, we classify inventory as having
been used or unused during the past year. For raw material inventory with no
usage in the past year, we reserve 85% of its cost which takes into account a
15% scrap value while for finished goods inventory with no usage in the past
year we reserve 80% of its costs. For inventory with usage in the past year, we
review the average annual usage over the past three years, project that amount
over the next five years, and then reserve 25% of the excess amount (in which
the excess amount equals inventory on hand less a five year projected usage
amount). We believe that 25% represents the value of excess inventory we would
not be able to recover due to our new product introductions and other
technological advancements over the next five years. As of June 30, 2004, a
portion of our inventory is in excess of optimal levels based upon historical
sales volumes. Certain new product development has been completed and marketing
programs implemented that have reduced this inventory, and will continue to
reduce it over the near term. No estimate can be made of a loss that is
reasonably possible should the programs not be successful.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to the risk of fluctuating interest rates in the ordinary course
of business for borrowings under our revolving credit facility. The lender
presently charges interest at 2.00% over the prime rate.
Our primary exposure to market risk is to changes in interest rates. We have
both fixed and variable rate debt. We have $2.95 million of debt outstanding as
of June 30, 2004. This entire amount has been borrowed at a fixed rate of 8.0%
with a maturity of December 2004. We have no variable rate debt under our
revolving line of credit as of June 30, 2004. As debt instruments mature, we
refinance such debt at the existing market interest rates, which may be more or
less than interest rates on the maturing debt. Changes in interest rates have
different impacts on the fixed and variable rate portions of our debt portfolio.
21
A change in interest rates impacts the net market value of our fixed rate debt,
but has no impact on interest incurred or cash flows on our fixed rate debt.
Interest rate changes on variable debt impacts the interest incurred and cash
flows but does not impact the net market value of the debt instrument.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of June 30,
2004. Based on this evaluation, they have concluded that, as of June 30, 2004,
our disclosure controls and procedures are reasonably designed and effective to
alert them on a timely basis to material information relating to us required to
be included in our reports filed or submitted under the Securities Exchange Act.
CHANGES IN INTERNAL CONTROLS
There were no significant changes to our internal controls or, to our knowledge,
in other factors that could significantly affect our internal controls, at the
date of our Chief Executive Officer's and Chief Financial Officer's last
evaluation of our internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
22
PART II- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Note 10 to the Company's condensed consolidated financial
statements included elsewhere in this report for the information required by
this Item.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY SECURITIES
On June 1, 2004, the Company redeemed all of its outstanding public warrants
that had not been exercised prior to May 30, 2004 for $0.10 per warrant. For
further information regarding the redemption of these warrants, reference is
made to Note 2 to the Company's condensed consolidated financial statements
included elsewhere in this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 2004 annual meeting of stockholders was held on May 5, 2004 at its
corporate offices at 7100 Technology Drive, West Melbourne, Florida to vote on
the election of six (6) directors to hold office until the annual meeting of
stockholders in 2005 and until their respective successors are duly elected and
qualified.
Proxies for the annual meeting were solicited pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended, and there was no solicitation
in opposition to the Company's solicitation.
The holders of record of an aggregate of 8,049,064 shares of the Company's
common stock, out of 9,840,639 shares outstanding on the record date for the
annual meeting, were present either in person or by proxy, and constituted a
quorum for the transaction of business at the annual meeting.
All nominees for director were elected with voting as detailed below:
FOR WITHHELD
--- --------
Donald F. U. Goebert 8,035,186 13,878
David P. Storey 8,034,040 15,024
Ralph R. Whitney 8,014,024 35,040
James C. Gale 8,008,576 40,488
George N. Benjamin III 7,983,430 65,634
Randolph K. Piechocki 8,035,138 13,926
23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 31.1 Certification Pursuant to Item 601(b)(31) of
Regulation S-K, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification Pursuant to Item 601(b)(31) of
Regulation S-K, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(furnished pursuant to Item 601(b)(32) of Regulation S-K).
Exhibit 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(furnished pursuant to Item 601(b)(32) of Regulation S-K).
(b) Reports on Form 8-K during the fiscal quarter ended June 30, 2004.
The registrant filed a report dated April 27, 2004 on Form 8-K on
April 28, 2004, reporting an Item 5 Event.
The registrant filed a report dated April 30, 2004 on Form 8-K on
May 3, 2004, reporting an Item 5 Event.
The registrant filed a report dated May 27, 2004 on Form 8-K on
June 1, 2004, reporting an Item 5 Event.
The registrant filed a report dated June 8, 2004 on Form 8-K on
June 10, 2004, reporting an Item 5 Event.
24
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
RELM WIRELESS CORPORATION
(The "Registrant")
Date: July 29, 2004 By: /s/William P. Kelly
------------------------
William P. Kelly
Executive Vice President and
Chief Financial Officer
(Principal financial and accounting
officer and duly authorized officer)
25
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER -----------
- -------
31.1 Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to
Item 601(b)(32) of Regulation S-K).
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to
Item 601(b)(32) of Regulation S-K).