Telular Corp. has a market cap of $51.3 million; its shares were traded at around $3.43 with a P/E ratio of 16.4 and P/S ratio of 1.1. WRLS is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Other income for the three months ended March 31, 2010 increased by $1 to $79 from $78 for the same period of fiscal 2009. This increase was primarily due to an increase of $13 from interest income and a decrease of $10 primarily from a $7 loss on disposal of capital equipment.
Engineering and development expenses decreased $5 primarily due to a $218 decrease in the engineering consulting fees offset by an increase of $213 in payroll related expenses as engineering and development filled open staff positions and reduced its utilization of third party consultants.
Management regularly reviews net working capital in addition to available cash to determine if it has enough cash to operate the business. On March 31, 2010, the Company had $23,774 of unrestricted cash and cash equivalents and working capital of $30,993, compared to cash and cash equivalents of $17,904 and working capital of $28,666 on September 30, 2009. The Company can draw upon a Loan and Security Agreement with Silicon Valley Bank that provides an aggregate working capital line of credit up to $10,000. Management expects trade accounts receivable and inventory to turn into cash in short periods of time. As such, given the level of cash and cash equivalents, trade accounts receivable and inventory, management believes the Company has adequate resources to fund current and planned operations in a manner consistent with historical practices.
Investing activities used $397 of cash for the first six months of fiscal 2010 from the acquisition of capital equipment. This compares to cash used by investing activities of $2,785 for the same period of fiscal 2009; $2,342 from the acquisition of TankLink and $443 from the purchase of capital equipment.
Financing activities generated $121 of cash for the first six months of fiscal 2010 from the exercise of stock options. For the same period of fiscal year 2009, cash of $3,626 was used by the Company to pay down $978 of notes payable, which were acquired in the TankLink purchase and the repurchase of its common stock on the open market of $2,648.
Significant management judgment is required to determine the reserve for obsolete or excess inventory. The Company currently considers inventory quantities greater than a one-year supply based on current year activity as well as any additional specifically identified inventory to be excess. The Company also provides for the total value of inventories that are determined to be obsolete based on criteria such as customer demand and changing technologies. At March 31, 2010, and September 30, 2009, the inventory reserves were $98 and $91, respectively. Changes in strategic direction, such as discontinuance or expansion of product lines, changes in technology or changes in market conditions, could result in significant changes in required reserves.
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