UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
QUARTERLY REPORT UNDER
SECTION 13 OR 15 (D) OF THE SECURITIES AND
EXCHANGE
ACT OF 1934
For the
quarterly period ended March 31, 2010
OR
¨
TRANSITION REPORT UNDER
SECTION 13 OR 15 (D) OF THE SECURITIES AND
EXCHANGE
ACT OF 1934
For the
transition period from __________to__________
Commission
File No. 1-16779
Henry
Bros. Electronics, Inc.
(Exact
name of Registrant as specified in its charter)
|
Delaware
|
22-3690168
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
17-01
Pollitt Drive
Fair
Lawn, New Jersey 07410
(address
of principal executive offices) (Zip Code)
Registrant’s
Telephone number, including area
code:
(201)
794-6500
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
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes
o
No
¨
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See the definitions
of “large accelerated filer”, “accelerated filer and” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer
o
|
Accelerated
filer
o
|
|
Non-accelerated
filer
o
(Do
not check if a smaller reporting company)
|
Smaller
reporting company
x
|
Indicate
by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes
o
No
x
Indicate
the number of shares outstanding of each of the Registrant’s Common Stock, as of
the latest practicable date: 6,045,366 shares of common stock, $.01 par value
per share, as of May 3, 2010.
|
|
|
Page
|
|
PART
I
|
FINANCIAL
INFORMATION
|
3
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
3
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and December
31, 2009 (Audited)
|
3
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the three months ended March 31,
2010 (Unaudited) and March 31, 2009 (Unaudited)
|
4
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the three months ended March 31,
2010 (Unaudited) and March 31, 2009 (Unaudited)
|
5
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Changes in Stockholders’ Equity for the three
months ended March 31, 2010 (Unaudited)
|
6
|
|
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
7-11
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12-15
|
|
|
|
|
|
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
15
|
|
|
|
|
|
Item 4.
|
Controls
and Procedures
|
15
|
|
|
|
|
|
PART II
|
OTHER
INFORMATION
|
|
|
|
|
|
|
Item 1.
|
Legal
Proceedings
|
15
|
|
|
|
|
|
Item 6.
|
Exhibits
|
15
|
|
|
|
|
SIGNATURES
|
16
|
|
|
|
|
|
|
|
|
Part
I Financial Information
|
|
|
|
|
|
|
|
Item
1. Financial Statements
|
|
|
|
|
|
|
|
|
|
|
HENRY
BROS. ELECTRONICS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
ASSETS
|
|
(unaudited)
|
|
|
(audited)
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,685,698
|
|
|
$
|
2,917,046
|
|
|
Accounts
receivable-net of allowance for doubtful accounts of
|
|
|
9,690,667
|
|
|
|
12,053,139
|
|
|
$728,840
at March 31, 2010 and $712,206 at December 31, 2009
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
1,525,991
|
|
|
|
1,245,306
|
|
|
Costs
in excess of billings and estimated profits
|
|
|
6,374,316
|
|
|
|
6,003,533
|
|
|
Deferred
tax asset
|
|
|
1,250,900
|
|
|
|
1,251,443
|
|
|
Retainage
receivable
|
|
|
370,144
|
|
|
|
295,928
|
|
|
Prepaid
expenses and income tax receivable
|
|
|
1,357,304
|
|
|
|
1,423,541
|
|
|
Other
assets
|
|
|
133,540
|
|
|
|
161,479
|
|
|
Total
current assets
|
|
|
22,388,560
|
|
|
|
25,351,415
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment - net of accumulated depreciation of
|
|
|
2,114,803
|
|
|
|
2,254,054
|
|
|
$3,755,594
at March 31, 2010 and $3,564,650 at December 31, 2009
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
3,818,330
|
|
|
|
3,785,480
|
|
|
Intangible
assets - net of accumulated amortization of $1,230,008 at
|
|
|
845,757
|
|
|
|
888,752
|
|
|
March
31, 2010 and $1,187,013 at December 31, 2009
|
|
|
|
|
|
|
|
|
|
Other
assets
|
|
|
411,025
|
|
|
|
412,594
|
|
|
TOTAL
ASSETS
|
|
$
|
29,578,475
|
|
|
$
|
32,692,295
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
& STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
4,411,814
|
|
|
$
|
5,360,471
|
|
|
Accrued
expenses
|
|
|
3,758,638
|
|
|
|
3,507,060
|
|
|
Billings
in excess of costs and estimated profits
|
|
|
810,506
|
|
|
|
1,567,874
|
|
|
Deferred
income
|
|
|
202,652
|
|
|
|
136,574
|
|
|
Current
portion of long-term debt
|
|
|
455,441
|
|
|
|
536,552
|
|
|
Other
current liabilities
|
|
|
431,032
|
|
|
|
494,017
|
|
|
Total
current liabilities
|
|
|
10,070,083
|
|
|
|
11,602,548
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt, less current portion
|
|
|
3,070,359
|
|
|
|
4,830,517
|
|
|
Deferred
tax liability
|
|
|
358,716
|
|
|
|
318,850
|
|
|
TOTAL
LIABILITIES
|
|
|
13,499,158
|
|
|
|
16,751,915
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $.01 par value; 2,000,000 shares authorized; no shares
issued
|
|
|
—
|
|
|
|
—
|
|
|
Common
stock, $.01 par value; 20,000,000 shares authorized
|
|
|
|
|
|
|
|
|
|
6,040,366
shares issued and outstanding in 2010 and 6,035,366 in
2009
|
|
|
60,404
|
|
|
|
60,354
|
|
|
Additional
paid in capital
|
|
|
18,518,788
|
|
|
|
18,437,288
|
|
|
Accumulated
deficit
|
|
|
(2,499,875
|
)
|
|
|
(2,557,262
|
)
|
|
TOTAL
EQUITY
|
|
|
16,079,317
|
|
|
|
15,940,380
|
|
|
TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
$
|
29,578,475
|
|
|
$
|
32,692,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the condensed consolidated financial
statements.
|
HENRY
BROS. ELECTRONICS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Revenue
|
|
$
|
12,441,292
|
|
|
$
|
15,308,212
|
|
|
Cost
of revenue
|
|
|
8,864,290
|
|
|
|
11,086,198
|
|
|
Gross
profit
|
|
|
3,577,002
|
|
|
|
4,222,014
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Selling,
general & administrative expenses
|
|
|
3,457,058
|
|
|
|
3,870,860
|
|
|
Operating profit
|
|
|
119,944
|
|
|
|
351,154
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
41,994
|
|
|
|
6,970
|
|
|
Other
income
|
|
|
4,465
|
|
|
|
13,186
|
|
|
Interest
expense
|
|
|
(58,977
|
)
|
|
|
(65,701
|
)
|
|
Income
before income tax expense
|
|
|
107,426
|
|
|
|
305,609
|
|
|
Income
tax expense
|
|
|
50,039
|
|
|
|
139,487
|
|
|
Net
income
|
|
$
|
57,387
|
|
|
$
|
166,122
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER
COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
Weighted
average common shares
|
|
|
5,887,698
|
|
|
|
5,829,581
|
|
|
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER
COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
Weighted
average diluted common shares
|
|
|
6,059,458
|
|
|
|
6,143,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the condensed consolidated financial
statements.
|
HENRY
BROS. ELECTRONICS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
For
the three months ended
|
|
|
|
|
March
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
57,387
|
|
|
$
|
166,122
|
|
|
Adjustments
to reconcile net income from operations
|
|
|
|
|
|
|
|
|
|
to
net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
250,859
|
|
|
|
222,691
|
|
|
Bad
debt expense
|
|
|
33,910
|
|
|
|
67,658
|
|
|
Provision
for obsolete inventory
|
|
|
368
|
|
|
|
—
|
|
|
Stock
option expense
|
|
|
60,000
|
|
|
|
60,000
|
|
|
Deferred
income taxes
|
|
|
40,409
|
|
|
|
232,177
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,329,204
|
|
|
|
(96,643
|
)
|
|
Inventory
|
|
|
(280,684
|
)
|
|
|
(21,502
|
)
|
|
Costs
in excess of billings and estimated profits
|
|
|
(370,783
|
)
|
|
|
1,359,708
|
|
|
Retainage
receivable
|
|
|
(74,216
|
)
|
|
|
398,165
|
|
|
Other
assets
|
|
|
29,508
|
|
|
|
(171,006
|
)
|
|
Prepaid
expenses and income tax receivable
|
|
|
66,237
|
|
|
|
(573,852
|
)
|
|
Accounts
payable
|
|
|
(948,656
|
)
|
|
|
(699,118
|
)
|
|
Accrued
expenses
|
|
|
251,578
|
|
|
|
(274,905
|
)
|
|
Billings
in excess of costs and estimated profits
|
|
|
(757,368
|
)
|
|
|
953,657
|
|
|
Deferred
income
|
|
|
66,078
|
|
|
|
126,773
|
|
|
Other
liabilities
|
|
|
(62,986
|
)
|
|
|
10,808
|
|
|
Net
cash provided by operating activities
|
|
|
690,845
|
|
|
|
1,760,733
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase
of businesses, net of cash acquired
|
|
|
(12,500
|
)
|
|
|
(25,000
|
)
|
|
Purchase
of property and equipment
|
|
|
(46,212
|
)
|
|
|
(112,813
|
)
|
|
Net
cash used in investing activities
|
|
|
(58,712
|
)
|
|
|
(137,813
|
)
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from exercising of stock options - net of fees
|
|
|
—
|
|
|
|
169,686
|
|
|
Borrowings
under revolving loan agreement
|
|
|
200,000
|
|
|
|
1,500,000
|
|
|
Repayments
under revolving agreement
|
|
|
(1,900,000
|
)
|
|
|
—
|
|
|
Payments
of bank loans
|
|
|
—
|
|
|
|
(57,757
|
)
|
|
Net
repayments of other debt
|
|
|
(86,518
|
)
|
|
|
(90,253
|
)
|
|
Payments
of equipment financing
|
|
|
(76,963
|
)
|
|
|
(67,894
|
)
|
|
Net
cash (used in) provided by financing activities
|
|
|
(1,863,481
|
)
|
|
|
1,453,782
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents
|
|
|
(1,231,348
|
)
|
|
|
3,076,702
|
|
|
Cash
and cash equivalents - beginning of period
|
|
|
2,917,046
|
|
|
|
27,704
|
|
|
Cash
and cash equivalents - end of period
|
|
$
|
1,685,698
|
|
|
$
|
3,104,406
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Amount
paid for the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
59,578
|
|
|
$
|
64,701
|
|
|
Taxes
|
|
|
—
|
|
|
|
710,152
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
|
Equipment
financed
|
|
|
22,400
|
|
|
|
217,464
|
|
|
Issuance
of stock to acquire businesses
|
|
|
20,350
|
|
|
|
79,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the condensed consolidated financial
statements.
|
HENRY
BROS. ELECTRONCS, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
par
value $0.01
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance
at December 31, 2009 (audited)
|
|
|
6,035,366
|
|
|
$
|
60,354
|
|
|
$
|
18,437,288
|
|
|
$
|
(2,557,262
|
)
|
|
$
|
15,940,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued in connection with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the
acquisition of CIS Security Systems
|
|
|
5,000
|
|
|
|
50
|
|
|
|
21,500
|
|
|
|
—
|
|
|
|
21,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of value assigned to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock
option grants
|
|
|
—
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
—
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
57,387
|
|
|
|
57,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2010 (unaudited)
|
|
|
6,040,366
|
|
|
$
|
60,404
|
|
|
$
|
18,518,788
|
|
|
$
|
(2,499,875
|
)
|
|
$
|
16,079,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the condensed consolidated financial
statements.
HENRY
BROS. ELECTRONICS, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
1.
Description of Business and Basis of Presentation
Interim
Financial Statements:
The
information presented as of March 31, 2010 and for the three month
periods ended March 31, 2010 and 2009 are unaudited, and reflect all adjustments
(consisting only of normal recurring adjustments) which Henry Bros. Electronics,
Inc. and its Subsidiaries (the “Company” or “HBE”) considers necessary for the
fair presentation of the Company’s financial position as of March 31, 2010, the
results of its operations and cash flows for the three month periods ended March
31, 2010 and 2009, and changes in stockholders’ equity for the three month
period ended March 31, 2010. The Company’s December 31, 2009 balance sheet
information was derived from the audited consolidated financial statements for
the year ended December 31, 2009, which are included as part of the Company’s
Annual Report on Form 10-K.
The
condensed consolidated financial statements included herein have been prepared
in accordance with U.S. generally accepted accounting principles and the
instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain
information and footnote disclosures normally included in financial statements
prepared in accordance with U.S. generally accepted accounting principles have
been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the Company’s financial statements and
notes thereto included in the Company’s latest shareholders’ annual
report.
As of
March 31, 2010, there have been no material changes to any of the significant
accounting policies described in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009.
Description
of Business:
Henry
Bros. Electronics, Inc., is an established player in the electronic physical
security industry, specializing in integrated security systems, and emergency
preparedness.
HBE
provides products and services to customers in the public and private sectors.
Customers include transit authorities, seaports, airports, universities,
office-buildings, hospitals and airlines. Each of the Company’s segments markets
its products and services nationwide with an emphasis in Arizona, California,
Colorado, Maryland, New Jersey, New York, Texas and Virginia.
The
company operates through two primary operating segments:
|
|
1.
|
Security
Systems Integration
|
|
|
2.
|
Specialty
Product and Services
|
The
Security Systems Integration business operates under the name Henry Bros.
Electronics, Inc. and its approach to client service is core to all of its
businesses. At the beginning of each new client relationship, HBE designates one
member of its professional staff as the client service contact. This individual
is the point person for communications between the client and HBE and often acts
as the client's project manager for all of its security needs, which ensures
that clients receive the best possible security solution to meet its needs. The
Company derives a majority of its revenues from project installations and to a
smaller extent, maintenance service revenue.
The
Specialty Products and Services segment includes three separate
businesses:
|
|
2.
|
Mobile
digital recording
|
|
|
3.
|
Airorlite
Communications
|
The
Evacuation Planning business operates under the Diversified Security Solutions,
Inc. name and works with managers of high-rise office buildings to analyze their
specific facilities’ needs with emergency preparedness plans. This division
provides demonstrations, training and recommendations to clients; develops
emergency plans and procedures; and communicates building strategy to the
tenants to increase building community unity, awareness and
confidence.
The
Mobile Digital Recording business operates under the name Viscom Products, Inc.
and has developed an integrated standard solution for the deployment of mobile
digital recorders on municipal buses and trains.
The
Airorlite Communications business provides specialized communications product
design, development and engineering related to RF transmission.
HENRY
BROS. ELECTRONICS, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
– (continued)
The table
below shows the sales percentages by geographic location for the following
periods:
|
|
|
Three
months ended
|
|
|
|
|
March
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
New
Jersey/New York
|
|
|
54
|
%
|
|
|
48
|
%
|
|
California
|
|
|
16
|
%
|
|
|
16
|
%
|
|
Texas
|
|
|
7
|
%
|
|
|
4
|
%
|
|
Arizona
|
|
|
5
|
%
|
|
|
8
|
%
|
|
Colorado
|
|
|
5
|
%
|
|
|
12
|
%
|
|
Virginia
/ Maryland
|
|
|
7
|
%
|
|
|
10
|
%
|
|
Integration
segment
|
|
|
94
|
%
|
|
|
98
|
%
|
|
Specialty
segment
|
|
|
6
|
%
|
|
|
2
|
%
|
|
Inter-segment
|
|
|
0
|
%
|
|
|
0
|
%
|
|
Total
revenue
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
2. Summary of Significant
Accounting Policies:
Principles
of Consolidation:
The
condensed consolidated financial statements include the accounts of the
Company. Acquisitions are recorded as of the purchase date, and are
included in the consolidated financial statements from the date of
acquisition. All material intercompany transactions have been
eliminated in consolidation.
Use
of Estimates:
The
preparation of financial statements, in conformity with generally accepted
accounting principles in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities, at the date
of the financial statements and the reported amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenue
and costs relating to security integration systems projects and service
agreements are particularly affected by management’s estimates. The contract
sale price and estimated costs are based upon the facts and circumstances known
at the time of the proposal. Estimates for the costs to complete the contract
are periodically updated during the performance of the contract. Unpredictable
events can occur during the performance of the contract that can increase the
costs and reduce the estimated gross profit. Change orders to record additional
costs may not be approved or can become subject to long negotiations with the
customer and can result in concessions by the Company. Considerable judgments
are made during the performance of the contract that affects the Company’s
revenue recognition and cost accruals that may have a significant impact on the
results of operations reported by the Company.
Fair
Value of Financial Instruments:
The
carrying amounts of the Company’s financial instruments, which include cash
equivalents, accounts receivable, accounts payable, accrued expenses, short and
long-term debt, approximate their fair values as of March 31, 2010.
Recently Issued Accounting
Pronouncements:
In
May 2009, the FASB issued guidance now codified as FASB ASC Topic 855,
“Subsequent Events,” which establishes general standards of accounting for, and
disclosures of, events that occur after the balance sheet date but before
financial statements are issued. This pronouncement is effective for interim or
fiscal periods ending after June 15, 2009. The adoption of this
pronouncement did not have a material impact on our consolidated financial
position, results of operations or cash flows. However, the provisions of FASB
ASC Topic 855 resulted in additional disclosures with respect to subsequent
events. In February 2010, an update to accounting guidance was issued which
eliminates the disclosure of the date through which subsequent events have been
evaluated. This update was effective immediately. The
adoption of this amendment did not have a significant effect on our financial
statements.
HENRY
BROS. ELECTRONICS, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
– (continued)
3. Earnings
Per Share
The
computation of basic earnings per share is based upon the weighted average
number of shares of common stock outstanding during the period. When applicable,
the computation of diluted earnings per share includes the dilutive effects of
common stock equivalents, less the shares that may be repurchased with the funds
received from their exercise and the effect of adding back unrecognized future
stock compensation expense. Potentially dilutive common stock equivalents
include shares issuable upon exercise of options. Contingent shares are excluded
from basic earnings per share.
4. Stock Based
Compensation
For the
three months ended March 31, 2010 and 2009, the Company charged $60,000 to
operations in each period for stock based compensation
expense.
A summary
of stock option activity for the three months ended March 31, 2010 under the
Company’s various Stock Option Plans’ follows:
|
|
|
Number
of Shares
|
|
|
Weighted
Average Exercise Price
|
|
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
Outstanding
|
|
|
Exercisable
|
|
|
December
31, 2009 (audited)
|
|
|
997,799
|
|
|
|
628,866
|
|
|
$
|
4.96
|
|
|
$
|
5.17
|
|
|
Granted
at market
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Forfeited
or expired
|
|
|
(10,300
|
)
|
|
|
|
|
|
|
6.09
|
|
|
|
|
|
|
March
31, 2010 (unaudited)
|
|
|
987,499
|
|
|
|
641,866
|
|
|
|
4.95
|
|
|
|
5.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There
were no stock option grants during the three months ended March 31,
2010.
5. Costs
and Billings on Uncompleted Contracts
Costs and
billing on uncompleted contracts consisted of the following:
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Cost
incurred on uncompleted contracts
|
|
$
|
59,897,785
|
|
|
$
|
46,259,927
|
|
|
Billings
on uncompleted contracts
|
|
|
54,333,975
|
|
|
|
41,824,268
|
|
|
|
|
$
|
5,563,810
|
|
|
$
|
4,435,659
|
|
|
|
|
|
|
|
|
|
|
|
Included
in accompanying Balance Sheets under the following captions:
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Costs
in excess of billings and estimated profits
|
|
$
|
6,374,316
|
|
|
$
|
6,003,533
|
|
|
Billing
in excess of costs and estimated profits
|
|
|
810,506
|
|
|
|
1,567,874
|
|
|
|
|
$
|
5,563,810
|
|
|
$
|
4,435,659
|
|
HENRY BROS. ELECTRONICS, INC AND
SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
– (continued)
6. Long-Term
Debt
On June
30, 2005, the Company entered into a loan agreement (the “Loan Agreement”) with
TD Bank, N.A. pursuant to which TD Bank extended a $4 million two-year
credit facility (the “Revolving Loan”), to the Company and refinanced $1 million
of existing indebtedness to TD Bank into a five year term loan (the “Term
Loan”).
On
October 6, 2008, the Company executed its fourth amendment to the Revolving Loan
with TD Bank, increasing its line of credit from $4 million to $8 million. The
Revolving Loan is subject to certain borrowing base limitations. On
November 11, 2009 the term of the Revolving Loan was extended to June 30,
2011. Advances under the Revolving Loan may be used to finance
working capital and acquisitions. Interest is paid monthly in arrears at TD
Bank’s prime rate, subject to a minimum floor rate of 4.0% effective November
11, 2009 as part of the extension of the Revolving Loan . TD Bank has
a first priority security interest on the Company’s accounts receivable and
inventory.
The
Company is required to maintain certain financial and reporting covenants and is
restricted from paying dividends under the terms of the Loan
Agreement.
Long-term
debt included the following balances:
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Revolving
line at the prime rate of interest, subject to a minimum
floor
|
|
|
|
|
|
|
|
rate
of 4.0% effective November 11, 2009. Expires June 30,
2011
|
|
$
|
2,635,898
|
|
|
$
|
4,335,898
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
insurance financed at 5.99% payable in monthly
|
|
|
|
|
|
|
|
|
|
installments
thru September 01, 2010
|
|
|
108,147
|
|
|
|
194,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized
lease obligations due in monthly installments,
|
|
|
|
|
|
|
|
|
|
with
interest ranging from 6.4% to 12.7%
|
|
|
781,755
|
|
|
|
836,506
|
|
|
|
|
|
3,525,800
|
|
|
|
5,367,069
|
|
|
Less:
Current Portion
|
|
|
(455,441
|
)
|
|
|
(536,552
|
)
|
|
|
|
$
|
3,070,359
|
|
|
$
|
4,830,517
|
|
|
|
|
|
|
|
|
|
|
|
The
weighted average interest rate on the Revolving Loan was 4.0% and 3.35% for the
three months ended March 31, 2010 and the year ended December 31, 2009,
respectively.
7. Income
Taxes
The
effective income tax rate for the three months ended March 31, 2010 was 46.6%,
compared to an effective income tax rate of 45.6% for the three months ended
March 31, 2009. Income tax expense for interim reporting is based on
an annual effective income tax rate forecast, which includes estimates and
assumptions that could change during the year. The differences
between the effective income tax rate and the U.S. federal statutory rate of 34%
principally result from state and local taxes, and differences between the book
and tax treatment of certain items that are permanent in nature.
The
effective income tax rate for the three months ended March 31, 2010 has not been
impacted by any material discrete items. As of March 31, 2010 the
Company has $49,893 of unrecognized liabilities from uncertain tax positions,
all of which would impact the Company’s effective tax rate if
recognized. There have been no significant changes during the three
months ended March 31, 2010.
HENRY
BROS. ELECTRONICS, INC AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
(UNAUDITED)
– (continued)
8. STOCKHOLDERS’
EQUITY
In
connection with the acquisition of all the capital stock of CIS Security Systems
Corp. (“CIS”) on October 2, 2006, the Company issued an aggregate of 20,000
shares of its common stock, valued at $67,200. The Company issued an
additional 30,000 shares during 2009, 2008 and 2007, and 5,000 shares during the
first three months of 2010 of its restricted common stock to CIS’s selling
shareholder after CIS met certain performance targets. The issuance of the
shares of restricted stock in connection with the aforementioned acquisition was
made in reliance upon the exemption provided in section 4(2) of the Securities
Act of 1933, as amended. In addition, the selling shareholder may
earn an additional 35,000 shares of the Company’s common stock if CIS achieves
certain performance targets through December 2011.
9. Segment
Data
Selected
information by business segment is presented in the following
tables:
|
|
|
For
the three months ended March 31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Revenue
|
|
|
|
|
|
|
|
Integration
|
|
$
|
11,668,478
|
|
|
$
|
14,989,646
|
|
|
Specialty
|
|
|
772,814
|
|
|
|
318,566
|
|
|
Inter-segment
|
|
|
—
|
|
|
|
—
|
|
|
Total
revenue
|
|
$
|
12,441,292
|
|
|
$
|
15,308,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
|
|
|
|
|
|
|
|
Integration
|
|
$
|
767,591
|
|
|
$
|
1,191,876
|
|
|
Specialty
|
|
|
267,121
|
|
|
|
63,896
|
|
|
Corporate
|
|
|
(914,768
|
)
|
|
|
(904,618
|
)
|
|
Total
operating profit
|
|
$
|
119,944
|
|
|
$
|
351,154
|
|
|
|
|
|
|
|
|
|
|
|
Selected
balance sheet information by business segment is presented in the following
table as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Total
Assets:
|
|
|
|
|
|
|
|
|
|
Integration
|
|
$
|
25,684,025
|
|
|
$
|
27,309,364
|
|
|
Specialty
|
|
|
1,240,112
|
|
|
|
1,454,812
|
|
|
Corporate
|
|
|
2,654,338
|
|
|
|
3,928,119
|
|
|
Total
assets
|
|
$
|
29,578,475
|
|
|
$
|
32,692,295
|
|
|
|
|
|
|
|
|
|
|
|
10. Contingent
Liabilities
From time
to time, the Company is subject to various claims with respect to matters
arising out of the normal course of business. In management’s opinion, none of
these claims is likely to have a material effect on the Company’s consolidated
financial statements.
11.
Related Party Transactions
Richard
D. Rockwell, a member of the Board of Directors since November 2007, has been
Owner and Chairman of Professional Security Technologies LLC, a full service
security systems integrator since 1996. The Company had revenues from
PST of $15,590 and $7,733 for the three months ended March 31, 2010 and 2009,
respectively. These revenues were principally related to the sale of
equipment. There was a balance of $39,425 and $39,192 in accounts
receivable as of March 31, 2010 and December 31, 2009,
respectively.
Item
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
Henry
Bros. Electronics, Inc., is an established player in the electronic physical
security industry, specializing in integrated security systems, and emergency
preparedness.
HBE
provides products and services to customers in the public and private sectors.
Customers include transit authorities, seaports, airports, universities,
office-buildings, hospitals and airlines. Each of the Company’s segments markets
its products and services nationwide with an emphasis in Arizona, California,
Colorado, Maryland, New Jersey, New York, Texas and Virginia.
The
company operates through two primary operating segments:
|
|
1.
|
Security
Systems Integration
|
|
|
2.
|
Specialty
Product and Services
|
The
Security Systems Integration business operates under the name Henry Bros.
Electronics, Inc. and its approach to client service is core to all of its
businesses. At the beginning of each new client relationship, HBE designates one
member of its professional staff as the client service contact. This individual
is the point person for communications between the client and HBE and often acts
as the client's project manager for all of its security needs, which ensures
that clients receive the best possible security solution to meet its needs. The
Company derives a majority of its revenues from project installations and to a
smaller extent, maintenance service revenue.
The
Specialty Products and Services segment includes three separate
businesses:
|
|
2.
|
Mobile
digital recording
|
|
|
3.
|
Airorlite
Communications
|
The
Evacuation Planning business operates under the Diversified Security Solutions,
Inc. name and works with managers of high-rise office buildings to analyze their
specific facilities’ needs with emergency preparedness plans. This division
provides demonstrations, training and recommendations to clients; develops
emergency plans and procedures; and communicates building strategy to the
tenants to increase building community unity, awareness and
confidence.
The
Mobile Digital Recording business operates under the name Viscom Products, Inc.
and has developed an integrated standard solution for the deployment of mobile
digital recorders on municipal buses and trains.
The
Airorlite Communications business provides specialized communications product
design, development and engineering related to RF transmission.
OUR
VISION AND STRATEGY
Our
vision is to maintain our leadership position in security technology. We
intend to do this in part by:
|
|
·
|
Providing
advice on product selection and system design;
|
|
|
·
|
Examining
and thoroughly testing each security product as it would be set up for use
in our customers’ facilities; and,
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|
|
·
|
Using
only systems and components that are reliable and efficient to
use.
|
In
addition to growing the business organically, we are opportunistically open to
the possibility of pursuing the strategic acquisition of synergistic integrators
and specialty products and service companies. To finance our
acquisitions, we have used a combination of internally generated cash, the sale
of Company common stock and bank debt. We currently have an $8 million revolving
credit facility, subject to certain borrowing base limitations, with TD
Bank. Borrowings under the revolving credit facility were $2,635,898
at March 31, 2010. It is our expectation and intent to use cash and to incur
additional debt as appropriate to finance future working capital and
acquisitions. Additionally, to fund future acquisitions we would
consider the issuance of subordinated debt, the sale of equity securities, or
the sale of existing Company assets.
TRENDS
Our
revenue forecast for 2010 is expected to fall within a range of $60 million to
$65 million. We anticipate our overall average operating margins for
our business to be in the range of 4.0% to 5.0% for the year ended December 31,
2010, as compared to an operating loss of 1.3% in 2009 and an operating profit
of 5.0% in 2008.
There are
several factors impacting operating margins, including levels of competition for
a particular project and the size of the project. As a significant
amount of our costs are relatively fixed, such as labor costs,
increases or decreases in revenues can have a significant impact on operating
margins. The Company continually monitors costs and pursues various
cost control measures and sales initiatives to improve operating
margins.
In
February 2008, the Company entered into a subcontractor agreement with Global
Security & Engineering Solutions, a division of L-3 Services, Inc. (the “L-3
Contract”) pursuant to which L-3 would issue task orders under its Indefinite
Quantity Firm Fixed Price Contract with the U.S. Marine Corp Systems Command to
deliver a Tactical Video Capture System (“TVCS”). TVCS is used for
real-time visualization and situational awareness while Marine units are
conducting military operations in urban terrain training
exercises. The performance period of the contract is three
years. In the first quarter of 2010, the revenue recognized under
this contract represented $0.7 million, compared to $1.5 million in the first
quarter of 2009. There were outstanding task orders included in our backlog of
approximately $2.9 million at March 31, 2010.
Three
Months Ended March 31, 2010 compared to March 31, 2009
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|
|
Three
months ended March 31,
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
%
change
|
|
|
Revenue
|
|
$
|
12,441,292
|
|
|
$
|
15,308,212
|
|
|
|
-18.7
|
%
|
|
Cost
of revenue
|
|
|
8,864,290
|
|
|
|
11,086,198
|
|
|
|
-20.0
|
%
|
|
Gross
profit
|
|
|
3,577,002
|
|
|
|
4,222,014
|
|
|
|
-15.3
|
%
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general & administrative expenses
|
|
|
3,457,058
|
|
|
|
3,870,860
|
|
|
|
-10.7
|
%
|
|
Operating
profit
|
|
|
119,944
|
|
|
|
351,154
|
|
|
|
-65.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
41,994
|
|
|
|
6,970
|
|
|
|
502.5
|
%
|
|
Other
income
|
|
|
4,465
|
|
|
|
13,186
|
|
|
|
-66.1
|
%
|
|
Interest
expense
|
|
|
(58,977
|
)
|
|
|
(65,701
|
)
|
|
|
-10.2
|
%
|
|
Income
before income tax expense
|
|
|
107,426
|
|
|
|
305,609
|
|
|
|
-64.8
|
%
|
|
Income
tax expense
|
|
|
50,039
|
|
|
|
139,487
|
|
|
|
-64.1
|
%
|
|
Net
income
|
|
$
|
57,387
|
|
|
$
|
166,122
|
|
|
|
-65.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
-
Revenue for the
three months ended March 31, 2010 was $12,441,292, representing a decrease of
$2,866,920 or 18.7%, as compared to revenue of $15,308,212 for the three months
ended March 31, 2009. Our integration segment revenues were
negatively impacted in the first quarter of 2010, compared to the same period in
2009, principally due to the protracted credit freeze and economic
downturn, the wind down of a large project in our Colorado operation
in 2009 that did not repeat in 2010, and a number of larger projects included in
the company’s December 31, 2009 backlog that had scheduled start dates beginning
with the Company’s second quarter. Lower revenues under the L-3 Contract also
contributed to this period-over-period decline. The L-3 Contract generated $0.8
million lower revenue in 2010 compared to 2009. Partially offsetting
these declines were increased revenue in the first quarter of 2010 over the
prior year from our Texas and Airorlite operations. Revenue in the
first quarter of 2010 includes a 59% increase in the Texas market from the
revenue recorded in the first quarter of 2009.
Cost of Revenue -
Cost of
revenue for the three months ended March 31, 2010 was $8,864,290 as compared to
$11,086,198 for the three months ended March 31, 2009. The gross profit margin
for the three months ended March 31, 2010 was 28.8 % as compared to 27.6% for
the three months ended March 31, 2009. The decline in gross profit
dollars was directly related to the decline in revenue discussed above. Although
California’s gross profit as a percent of revenue (“gross margin”) declined in
the first quarter of 2010 compared to the first quarter of 2009, the gross
margin in our Colorado, Arizona and Mid-Atlantic operations each increased in
this same comparable period, reflecting management’s increased cost containments
and efficiency improvements efforts in order to the lessen the negative impact
of the protracted credit freeze and economic downturn. Partially
offsetting the declines was increased gross profit dollars and margin from our
Airorlite operations.
Selling, General and Administrative
Expenses -
Selling, general and administrative expense was $3,457,058
for the three months ended March 31, 2010 as compared to $3,870,860
for the three months ended March 31, 2009. This decrease of $413,802 or 10.7%
was mainly attributable to lower personnel costs and overall cost containment
reflecting management’s efforts to lessen the negative impact of the protracted
credit freeze and economic downturn.
Interest Income –
Interest
income for the three months ended March 31, 2010 was $41,944 as compared to
$6,970 for the three months ended March 31, 2009. This increase was
attributable to interest earned on an income tax refund and higher
average cash balances during the three month period ended March 31, 2010 versus
the same period in the prior year.
Interest Expense -
Interest
expense for the three months ended March 31, 2010 was $58,977 as compared to
$65,701 for the three months ended March 31, 2009. The decrease is
due to the average outstanding revolving debt balance being $1,254,444
lower in the three month period ended March 31, 2010 versus that in the three
months ended March 31, 2009. The lower outstanding revolving debt
balance was offset in part by a 75 basis point higher average rate of
interest charged in 2010 compared to the same period in 2009. This
higher rate of interest was the result of interest now being paid at TD Bank’s
prime rate, subject to a minimum floor rate of 4.0% as part of the extension of
the Revolving Loan, which was effective as of November 11,
2009.
Tax Expense –
The
Company recognized income tax expense for the three months ended March 31, 2010
of $50,039, based upon income before income taxes of
$107,426, compared with income tax expense of $139,487 for the three months
ended March 31, 2009, based upon income before income taxes of $305,609.
Income tax expense for interim reporting is based on an annual
effective income tax rate forecast, which includes estimates and assumptions
that could change during the year. The differences between the
effective income tax rate and the U.S. federal statutory rate of 34% principally
result from state and local taxes, and differences between the book and tax
treatment of certain items that are permanent in nature. The
effective income tax rate for the three months ended March 31, 2010 was 46.6%,
compared to an effective income tax rate of 45.6% for the three months ended
March 31, 2009.
Net Income
- As a result of
the above noted factors our net income was $57,387 for the three months ended
March 31, 2010, compared to net income of $166,122 for the three months ended
March 31, 2009. This resulted in diluted income per share of $0.01 on
weighted average diluted common shares outstanding of 6,059,458 for the three
months ended March 31, 2010, as compared to diluted earnings per share of $0.03
on weighted average diluted common shares outstanding of 6,143,851 for the three
month period ended March 31, 2009.
Liquidity and
Capital Resources
As of
March 31, 2010, we had cash and cash equivalents of $1,685,698. Our
net current assets were $12,318,477 at March 31, 2010 versus $13,748,867 at
December 31, 2009. Total debt at March 31, 2010 was $3,525,800
compared to the December 31, 2009 balance of $5,367,070.
Cash
provided by operating activities was $690,845 during the three months ended
March 31, 2010. The most significant provider of cash resulted from a
net decrease in accounts receivable of $2,329,204. Partially
offsetting this was a use of cash resulting from a decrease in accounts payable
and billings in excess of costs and estimated profits of $948,656 and $757,368,
respectively, combined with an increase in costs in excess of billings and
estimated profits of $370,783.
Cash used
in investing activities was $58,712, comprised of $46,212 for the purchase of
property and equipment and $12,500 of earn-out payments associated with the CIS
acquisition.
Cash used
in financing activities was $1,863,481, all of which represents the net
repayments of bank loans and other debt.
Borrowings
under the revolving credit facility were $2,635,898 at March 31, 2010 and were
$4,335,898 at December 31, 2009. On October 6, 2008, the Company
executed an amendment to its revolving credit agreement with TD Bank, increasing
its line of credit from $4 million to $8 million. On November 11, 2009 the
term of the revolving credit agreement was extended to June 30, 2011.
As part of this extension, interest will continue be paid monthly in arrears at
TD Bank’s prime rate, however, interest will now be subject to a minimum floor
rate of 4.0%. The Company is required to maintain certain financial and
reporting covenants and restrictions on dividend payments under the terms of the
Loan Agreement with TB Bank, N.A. (See Note 6 to the Condensed Consolidated
Financial Statements included in this Quarterly Report on Form
10-Q).
Backlog and
Bookings
Booked orders increased $3,044,260 to
$14,785,023 in the first quarter of 2010, as compared to $11,740,763 same
quarter of 2009
.
The
Company’s backlog of $30,365,525 at March 31, 2010 increased $10,231,731 from
the March 31, 2009 backlog of 20,133,794. The principal drivers of
this increase were increase bookings in our New Jersey / New York, Texas and
California operations.
Critical
Accounting Policies and Estimates
Disclosure
of the Company’s significant accounting policies is included in Note 1 to the
consolidated financial statements of the Company’s Annual Report on Form 10-K
for year ended December 31, 2009. Some of these policies require
management to make estimates and assumptions that may affect the reported
amounts in the Company’s financial statements.
Forward Looking
Statements
When used
in this discussion, the words "believes", "anticipates", "contemplated",
"expects", or similar expressions are intended to identify forward looking
statements. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Those
risks and uncertainties include changes in interest rates, the ability to
control costs and expenses, significant variations in recognized revenue due to
customer caused delays in installations, cancellations of contracts by our
customers, and general economic conditions which could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. The Company undertakes no obligation to publicly release the results
of any revisions to those forward looking statements that may be made to reflect
events or circumstances after this date or to reflect the occurrence of
unanticipated events.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
We have
one revolving credit facility for which the interest rate on outstanding
borrowings is variable and is based upon the prime rate of interest, subject to
a minimum floor rate of 4.0%. At March 31, 2010, there was $2,635,898
outstanding under this credit facility.
Our
business is impacted by the health of the U.S economy. Current
economic conditions have caused a decline in business spending which has
adversely affected our business and financial performance and our operating
results. Accordingly, our business and financial performance has been
adversely affected by current economic conditions, and any future deterioration
of economic conditions, could cause a further reduction in the availability of
credit in the capital markets to our customers.
Item
4. Controls and Procedures
(a) Evaluation of Disclosure
Controls and Procedures
The
Company’s Chief Executive Officer, Chief Operating Officer and Chief Financial
Officer have evaluated the effectiveness of our disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of March
31, 2010. Based on such evaluation, such officers have concluded that, as
of March 31, 2010, the Company’s disclosure controls and procedures are
effective.
(b) Changes in Internal
Control Over Financial Reporting
During
the three months ended March 31, 2010, management did not identify any changes
in the Company’s internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Part II - Other
Information
Item
1.
Legal
Proceedings
We know
of no material litigation or proceeding, pending or threatened, to which we are
or may become a party.
|
Number
|
|
Description
|
|
|
|
|
|
31.1
|
|
Rule
13a-14(a) 15d-14(a) Certification of Chief Executive
Officer
|
|
31.2
|
|
Rule
13a-14(a) 15d-14(a) Certification of Chief Operating
Officer
|
|
31.3
|
|
Rule
13a-14(a) 15d-14(a) Certification of Chief Financial
Officer
|
|
32
|
|
Section
1350 Certification
|
In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
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.
|
|
Henry
Bros. Electronics, Inc.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
Date:
May 12, 2010
|
By:
|
/s/
JAMES E. HENRY
|
|
|
|
|
James
E. Henry
|
|
|
|
|
Vice
Chairman, Chief Executive Officer,
Treasurer
and Director
|
|
|
|
|
|
|
|
Date:
May 12, 2010
|
By:
|
/s/
BRIAN REACH
|
|
|
|
|
Brian
Reach
|
|
|
|
|
President,
Chief Operating Officer,
Secretary
and Director
|
|
|
|
|
|
|
|
Date:
May 12, 2010
|
By:
|
/s/
JOHN P. HOPKINS
|
|
|
|
|
John
P. Hopkins
|
|
|
|
|
Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
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