10-Q 1 ora_2001dec10-q.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION Washington, DC 25049 ----------------------- 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 December 31, 2001 ( ) 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 0-21903 ORA ELECTRONICS, INC. ------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 95-4607830 -------- ---------- (State or Other Jurisdiction of (IRS Employer Identification Incorporation or Organization) Number) 9410 Owensmouth Avenue, Chatsworth, CA 91311 -------------------------------------------- (Address of Principal Executive Offices)(Zip Code) (818) 772-2700 -------------- (Registrant's Telephone Number, Including Area Code) (No Change) ----------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ..X.. No ..... APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Page 1 of 15 Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ..... No ..... Not Applicable ..X.. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at February 19, 2002 ----- -------------------------------- Common Stock, $.001 par value 23,568,175 shares Page 2 of 15 ORA ELECTRONICS, INC. Form 10-Q December 31, 2001 TABLE OF CONTENTS Page ---- PART I - Financial Information. 4 Item 1. Financial Statements 4 Balance Sheets as of December 31, 2001 and March 31, 2001 4 Statements of Operations and Retained Deficit for the three and nine month periods ended December 31, 2001 and 2000 6 Statements of Cash Flows for the nine month periods ended December 31, 2001 and 2000 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 10 PART II - Other Information. 15 Item 6. Exhibits and Reports on Form 8-K. 15 Signatures 15 Page 3 of 15 PART I -FINANCIAL INFORMATION. ITEM 1. FINANCIAL STATEMENTS. ORA ELECTRONICS, INC. Balance Sheets December 31, March 31, 2001 2001 (Unaudited) (Audited) ----------- --------- ASSETS Current assets: Cash and cash equivalents $ 0 $ 102,202 Trade accounts receivable, less allowance for sales returns and doubtful accounts of $428,818 ($289,187 at March 31, 2001) 58,122 8,442 Inventories 53,641 34,797 ------------ ------------ Total current assets 111,763 145,441 Property and equipment, net 5,508,702 5,636,503 Other assets: Deferred expenses 270,578 273,235 ------------ ------------ Total assets $ 5,891,043 $ 6,055,179 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 1,593,303 $ 1,499,499 Notes payable 540,000 - Trade payables 5,220,103 5,463,278 Accrued interest 19,173 19,173 Other accounts payable and accrued expenses 292,078 80,255 ------------ ------------ Total current liabilities 7,664,657 7,062,205 Security deposit 0 33,580 Long-term debt 4,199,842 4,276,370 ------------ ------------ Total liabilities 11,864,499 11,372,155 ------------ ------------ See accompanying notes to financial statements. Page 4 of 15 ORA ELECTRONICS, INC. Balance Sheets (Continued) December 31, March 31, 2001 2001 (Unaudited) (Audited) ----------- --------- Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized, none issued - - Common stock, par value $.001 per share, authorized 30,000,000 shares, issued and outstanding 23,590,152 shares at December 31, 2001 and 8,518,152 shares at March 31, 2001 23,590 8,518 Additional paid in capital 7,719,478 7,284,549 Retained (deficit) (13,716,524) (12,610,043) ------------ ------------ Total stockholders' equity (5,973,456) (5,316,976) ------------ ------------ Total liabilities and stockholders' equity $ 5,891,043 $ 6,055,179 ============ ============ See accompanying notes to financial statements. Page 5 of 15 ORA ELECTRONICS, INC. Statements of Operations and Retained Deficit For the Three Month and Nine Month Periods Ended December 31, 2001 and 2000 (Unaudited)

Three months ~~Six~~Nine months 2001 2000 2001 2000 ---- ---- ---- ---- Net sales $ ~~158~~98,~~038~~308 $ ~~219~~439,~~419~~183 $ ~~261~~359,~~332~~640 $ ~~471~~910,~~320~~503 Cost of goods sold 8243,~~067~~271 ~~296~~283,~~628~~147 ~~131~~174,~~157~~428 ~~410~~693,~~363~~509 ----------- ----------- ----------- ----------- Gross profit 7555,~~971~~037 ~~(77~~156,~~209)~~036 ~~130~~185,~~175~~212 60216,~~957~~994 ----------- ----------- ----------- ----------- Operating expenses: Selling and shipping 9261,~~283~~657 ~~105~~128,~~851~~690 ~~258~~225,~~606~~822 ~~274~~427,~~210~~917 Administrative and general ~~332~~221,~~145~~825 ~~380~~499,~~979~~753 ~~496~~812,~~172~~438 ~~986~~1,~~934~~461,669 ----------- ----------- ----------- ----------- Total operating expenses ~~424~~283,~~428~~482 ~~486~~628,~~830~~443 ~~754~~1038,~~778~~260 1,~~261~~889,~~144~~586 ----------- ----------- ----------- ----------- Operating (loss) (~~348~~228,~~457~~445) (~~564~~472,~~039~~407) (~~624~~853,~~603~~048) (1,~~200~~672,~~187~~592) Interest (expense) (136,~~088~~561) (~~136~~135,~~414~~981) (~~272~~408,~~181~~743) (~~278~~414,~~362~~343) Other income (Note 7) 5838,~~328~~536 5650,~~535~~868 ~~116~~155,~~774~~310 ~~118~~169,~~433~~299 ----------- ----------- ----------- ----------- (Loss) before income taxes (~~426~~326,~~217~~470) (~~643~~557,~~918~~520) (~~780~~1,~~010~~106,480) (1,~~360~~917,~~116~~636) Provision for income taxes - - - - ----------- ----------- ----------- ----------- Net (loss) (~~426~~326,~~217~~470) (~~643~~557,~~918~~520) (~~780~~1,~~010~~106,480) (1,~~360~~917,~~116~~636) Retained deficit, beginning of period (1213,~~963~~900,~~871~~054) (11,~~015~~659,~~404~~322) (12,610,043) (10,299,206) ----------- ----------- ----------- ----------- Retained deficit, end of period $(13,~~390~~716,~~054~~524) $(1112,~~659~~616,~~322~~842) $(13,~~390~~716,~~054~~524) $(1112,~~659~~216,~~322~~842) =========== =========== ============ =========== Per common share information: Net (loss) $ (~~426~~326,~~217~~470) $ (~~643~~557,~~918~~520) $ (~~780~~1,~~010~~106,480) $(1,~~360~~917,~~116~~636) =========== =========== ============ =========== (Loss) per share: Basic and diluted $ (0.0201) $ (0.0907) $ (0.0304) $ (0.1826) =========== =========== =========== =========== Weighted average shares outstanding used in the per share calculation: Basic and diluted 23,~~568~~590,~~152~~219 7,517,~~844~~998 23,~~568~~590,~~152~~219 7,517,~~000~~998 =========== =========== =========== ===========

See accompanying notes to financial statements. Page 6 of 15 ORA ELECTRONICS, INC. Statements of Cash Flows For the Nine Month Periods Ended December 31, 2001 and 2000 (Unaudited) Nine Months Ended December 31, 2001 2000 ---- ---- Cash flows from operating activities: Net income (loss) $(1,106,480) $ (1,917,636) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 130,457 156,355 Provision for losses and sales returns - (7,618) Changes in assets and liabilities: Trade accounts receivable (49,680) 41,125 Inventories (18,844) 121,020 Prepaid expenses - 9,372 Notes payable 540,000 - Trade payables (243,175) 326,343 Other accounts payable and accrued expenses 211,823 151,699 ----------- ----------- Net cash provided by (used in) operating activities (535,899) (1,119,340) ----------- ----------- Cash flows from investing activities: Capital expenditures - - Loan receivable, officer - 298,097 Security deposits - - ----------- ----------- Net cash (used in) investing activities - 298,097 ----------- ----------- Cash flows from financing activities: Borrowing (repayment) of long-term debt (110,108) 24,350 Issuance of common stock 450,001 398,400 ----------- ----------- Net cash provided by financing activities 391,720 422,750 ----------- ----------- Net (decrease) in cash and cash equivalents (102,202) (398,493) Cash and cash equivalents, beginning of period 102,202 398,493 ----------- ----------- Cash and cash equivalents, at end of period $ - $ - =========== =========== Supplemental disclosure of cash flow information: Interest paid $ 78,908 $ 323,188 =========== =========== Income taxes paid $ - $ - =========== =========== See accompanying notes to financial statements. Page 7 of 15 ORA ELECTRONICS, INC. Notes to Financial Statements (Unaudited) NOTE 1 - DESCRIPTION OF BUSINESS ORA Electronics, Inc. (the "Company" or the "Registrant") is a developer and supplier of interface, connectivity solutions and peripheral accessories for wireless communication devices. The Company's products supplement the effectiveness of cellular telephones, personal communications systems ("PCS"), pagers, computing devices and the intelligent transportation systems industry. Among the Company's customers are major national and regional retailers, service providers and wireless carriers, original equipment manufacturers ("OEMs"). NOTE 2 - FINANCIAL RESULTS AND LIQUIDITY The Company has incurred operating losses of $1,976,444, $5,903,483 and $1,032,025 in the fiscal years ended March 31, 2001, 2000 and 1999, and is reporting an operating loss for the nine months ended December 31, 2001 of $1,106,480. For several years the company's major competitors, many with greater resources, have aggressively lowered their selling prices in an attempt to increase market share. Although the company has benefited from its own internal cost reduction programs, the effects of lower pricing by major competitors has more than offset the company's cost reductions. The Company's management team has been developing a broad operational and financial restructuring plan. The plan, which is designed to leverage the company's brand, distribution and technology strengths, includes reducing costs, disposition of certain assets, focusing on development of alternative channels of distribution and capitalizing on the company's patented technologies. Restructuring costs must be incurred to implement the plan. Going forward, significant cash flow will be needed to pay the restructuring costs to implement the proposed business plan and to fund losses until the company has returned to profitability. While there is no assurance that funding will be available to execute the plan, the company is continuing to seek financing to support its turnaround efforts and is exploring a number of alternatives in this regard. The company's independent public accountants have included a "going concern" emphasis paragraph in their audit report accompanying the March 31, 2001 financial statements. The paragraph states that the company's recurring losses and its inability to secure working capital financing raise substantial doubt about the company's ability to continue as a going concern and cautions that the financial statements do not include adjustments that might result from the outcome of this uncertainty. The financial statements at, and for the three month and nine month periods ended, December 31, 2001, similarly do not include adjustments that might result from the outcome of this uncertainty. Page 8 of 15 The Company believes that available cash, cash flow from operations and any borrowings that might be made available through a yet to be obtained credit facility, may not to be sufficient to cover liquidity requirements after February 28, 2002, and the Company is currently facing the prospect of not having adequate funds to operate its business. There can be no assurance that any long-term restructuring alternative can be successfully initiated or implemented by February 28, 2002, in which case the Company may be compelled to pursue a bankruptcy filing in the absence of a proposed or pre-approved financial restructuring. NOTE 3 - BASIS OF INTERIM PRESENTATION Interim financial statements and information are unaudited; however, in the opinion of management all adjustments necessary for a fair presentation of the interim results have been made. All such adjustments were of a normal recurring nature. The results for the three and nine months ended December 31, 2001 are not necessarily an indication of results to be expected for the entire fiscal year. The accompanying financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and the footnotes required by generally accepted accounting principles for complete statements. All information reported in this Form 10-Q should be read in conjunction with the Company's annual financial statements and notes thereto for the fiscal year ended March 31, 2001 filed with the Securities and Exchange Commission. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For comparative purposes, certain amounts in the financial statements from the prior periods ended March 31, 2001 and December 31, 2000 have been reclassified. NOTE 4 - LEGAL PROCEEDINGS The Company is involved in some legal proceedings, many of which arise in the ordinary course of its business. While any litigation contains an element of uncertainty, management believes that the outcome of such proceedings will not have a material adverse effect on the Company's results of operations. Page 9 of 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Management's discussion and analysis should be read in conjunction with the Company's financial statements and the notes thereto. RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED DECEMBER 31, 2001 TO THREE MONTHS ENDED DECEMBER 31, 2000 Net Sales. Net sales decreased by $340,881, or 77.6%, to $98,308 for the third quarter of fiscal 2002 compared to $439,183 for the same period of the prior year. The decrease represents a continuation of a trend of the Company's inability to retain its customer base largely due to severe cash flow constraints, as more fully described in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations below. The Company is actively exploring ways to raise the required capital to enable it to replace this reduction in net sales, including exploring alternative channels of distribution, however, no assurance can be given that the Company will be able to do so. Gross Profit. Gross profit decreased by $100,999, to $55,037 for the third quarter of fiscal 2002 compared with a gross profit of $156,036 for same period of the prior year. The gross profit as a percentage of net sales was approximately 55.9% for the current period, while the gross loss for the prior period was primarily attributable to the discounting of old, slow-moving inventory. Selling and Shipping Expense. Selling and shipping expense decreased by $67,033, or 52.1%, to $61,657 for the third quarter of fiscal 2002 compared with $128,690 in the same period of the prior year. The decrease in selling and shipping expense is primarily attributable to lower costs of shipping, warehousing, freight and sales commissions resulting from lower sales volume. Administrative and General Expense. Administrative and general expense decreased by $277,928, or 55.6%, to $221,825 for the third quarter of fiscal 2002 compared with $499,753 in the same period of the prior year. The decrease is primarily attributed to a reduction in personnel and salaries of existing personnel during the quarterly period ended December 31, 2001 as part of the Company's efforts to reduce expenses. Interest Expense. Interest expense for the third quarter of fiscal 2002 was $136,561 compared with $135,981 in the same period of the prior year. Other Income and Expense. Other income for the third quarter of fiscal 2002 was $38,536 compared with $50,868 in the same period of the prior year. Other income is primarily comprised of rental income from a tenant who is leasing approximately 38,000 square feet of the Company's facility. Page 10 of 15 Income Taxes. The Company has made no provision for income taxes as it has a history of net losses, which has resulted in tax loss carryforwards. At December 31, 2001, the Company had available federal net operating loss carryforwards of approximately $10,120,000, which expire in 2012 through 2013, and state net operating loss carryforwards of approximately $3,505,000, which expire in 2002 through 2008. COMPARISON OF NINE MONTHS ENDED DECEMBER 31, 2001 TO NINE MONTHS ENDED DECEMBER 31, 2000 Net Sales. Net sales decreased by $550,903, or 60.5%, to $359,640 for the nine months of fiscal 2002 ended December 31, 2001, compared with $910,503 for the same period of the prior year. The decrease represents a continuation of a trend of the Company's inability to retain its customer base largely due to severe cash flow constraints, as more fully described in the Liquidity and Capital Resources section of Management's Discussion and Analysis of Financial Condition and Results of Operations below. The Company is actively exploring ways to raise the required capital to enable it to replace this reduction in net sales, including exploring alternative channels of distribution, however, no assurance can be given that the Company will be able to do so. Gross Profit. Gross profit decreased by $31,782, or 14.6%, to $185,212 for the nine months of fiscal 2002 ended December 31, 2001 compared with $216,994 for the same period of the prior year, while gross profit as a percentage of net sales increased to 51.5% from 23.8%. Gross profit and gross profit as a percentage of net sales for the prior period were negatively affected by the discounting of old, slow-moving inventory during that period. Selling and Shipping Expense. Selling and shipping expense decreased by $202,095, or 47.2%, to $225,822 for the nine months of fiscal 2002 ended December 31, 2001 compared with $427,917 in the same period of the prior year. The decrease in selling and shipping expenses is primarily attributable to lower costs of shipping, warehousing, freight and sales commissions as result of decreased sales volume. Administrative and General Expense. Administrative and general expense decreased by $649,231, or 44.4%, to $812,438 for the nine months of fiscal 2002 ended December 31, 2001 compared with $1,461,669 for the same period of the prior year. The decrease is primarily attributable to a reduction in personnel and salaries of existing personnel during the nine month period ended December 31, 2001 as part of the Company's efforts to reduce expenses. Interest Expense. Interest expense for the nine months of fiscal 2002 ended December 31, 2001 was $408,743 compared with $414,343 in the same period of the prior year. The reduction is primarily attributed to the aging of the Company's mortgage on the Company's building, whereby more principal and less interest is amortized as the loan matures. Other Income and Expense. Other income for the nine months of fiscal 2002 was $155,310 compared with Other income of $169,299 in the same period of the prior year. Other income is primarily attributable to rental income from a tenant who is occupying a portion of available space in the Company's corporate facility. Page 11 of 15 Income Taxes. The Company has made no provision for income taxes as it has a history of net losses, which has resulted in tax loss carryforwards. At December 31, 2001, the Company had available federal net operating loss carryforwards of approximately $10,120,000, which expire in 2012 through 2013, and state net operating loss carryforwards of approximately $3,505,000, which expire in 2002 through 2008. LIQUIDITY AND CAPITAL RESOURCES The Company's primary cash requirements are to fund working capital needs, primarily accounts receivable and inventories. Historically, the Company has satisfied these working capital requirements principally through cash flow from operations and bank borrowings. At December 31, 2001, the Registrant had $0 in cash and cash equivalents with a working capital deficiency of $7,552,894, contrasted to $0 in cash and cash equivalents with a working capital deficiency of $5,556,443 at December 31, 2000. Net cash used in operating activities was $535,899 for the nine months ended December 31, 2001, compared with net cash used in operating activities of $1,119,340 for the nine months ended December 31, 2000. Working capital may vary from time to time as a result of seasonality, new product introductions, capital expenditures and changes in inventory levels. The Company believes that available cash, cash flow from operations and any borrowings that might be made available through a yet to be obtained credit facility, may not be sufficient to meet operating needs and capital expenditure requirements in the immediate future. The Company has incurred operating losses of $1,976,444, $5,903,483 and $1,032,025 in the fiscal years ended March 31, 2001, 2000 and 1999, and is reporting an operating loss for the nine months ended December 31, 2001 of $624,603. For several years the Company's major competitors, many with greater resources, have aggressively lowered their selling prices in an attempt to increase market share. Although the Company has benefited from its own internal cost reduction programs, the effects of lower pricing by major competitors has more than offset the Company's cost reductions. The Company has been developing a broad operational and financial restructuring plan. The plan, which is designed to leverage the Company's brand, distribution and technology strengths, includes reducing costs, disposition of certain assets, focusing on development of alternative channels of distribution and capitalizing on the Company's patented technologies. Restructuring costs must be incurred to implement the plan. Going forward, significant cash flow will be needed to pay the restructuring costs to implement the proposed business plan and to fund losses until the Company has returned to profitability. While there is no assurance that funding will be available to execute the plan, the Company is continuing to seek financing to support its turnaround efforts and is exploring a number of alternatives in this regard. The Company's independent public accountants have included a "going concern" emphasis paragraph in their audit report accompanying the March 31, 2001 financial statements. The paragraph states that the Company's recurring Page 12 of 15 losses and its inability to secure working capital financing raise substantial doubt about the Company's ability to continue as a going concern and cautions that the financial statements do not include adjustments that might result from the outcome of this uncertainty. Similarly, the unaudited financial statements presented for the periods ending December 31, 2001, do not include any adjustments that might be necessary if the Company were not able to continue as a going concern. Existing cash flow is not expected to be sufficient to cover liquidity requirements after February 28, 2002, and the Company is currently facing the prospect of not having adequate funds to operate its business. There can be no assurance that any long-term restructuring alternative can be successfully initiated or implemented by February 28, 2002, in which case the Company may be compelled to pursue a bankruptcy filing in the absence of a proposed or pre-approved financial restructuring. On December 23, 1996, the Company obtained a $1,000,000 loan from an unrelated third party which was used to pay the initial required $1,000,000 reduction on its then existing credit facility. Such $1,000,000 loan bears interest at 8% per annum and all principal and interest is due and payable upon maturity on December 31, 2001. At December 31, 2001, the balance of principal and accrued interest was $1,492,494. The loan from the Aid Association for Lutherans ("AAL") obtained by the Company to purchase its headquarters and distribution facility in Chatsworth, California is, by its terms, callable by AAL upon nine months notice. As of December 31, 2001, the outstanding principal balance of such loan was $4,554,092. Such loan bears interest at 9.875% per year, is payable in monthly installments of $43,418, representing both principal and interest, matures in February 2019 and is secured by the real property on which the facility is located. As of December 31, 2001, the Company is six months delinquent on the mortgage payments to AAL, having missed 6 payments due on July 15th, 2001 thru December 15, 2001, and the Company as been serviced with a Notice of Default. Unpaid and delinquentproperty taxes on the property amount to $260,508 as of December 31, 2001. The Company is attempting to sell or refinance the property in order to cure the delinquencies. However, no assurances can be given that the Company will be able to do so. There was no cash provided by or used in investing activities for the first nine months of fiscal 2002, compared with net cash provided by investing activities of $298,097 for the first nine months of fiscal 2001. The net cash provided by investing activities in the prior period was attributable to the repayment of an officers loan receivable during that period. Cash flows provided by financing activities were $391,720 for the first nine months of fiscal 2002, compared with cash flows provided by financing activities of $422,750 for the first nine months of fiscal 2001. The decrease in cash flows provided by financing activities is primarily attributed to an decrease in capital provided to the Company by its major shareholder. Page 13 of 15 FORWARD LOOKING INFORMATION This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time, in filings with the Securities Exchange Commission or otherwise. Statements contained herein that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions referenced above. The matters discussed herein with respect to the anticipated growth of the wireless telephone industry and the development of new wireless communications technologies, the introduction of new products by the Company, the Company's ability to penetrate new distribution channels, the Company's ability to restructure its existing business, the Company's ability to replace business from lost customers, future sales levels, costs associated with the Company's new management information system, compliance with financial covenants in loan agreements, and the potential outcome of any pending litigation involving the Company, among others, are forward looking statements. In addition, when used in this discussion, the words "anticipates," "expects," "intends," "plans" and variations thereof and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained in this Quarterly Report. Statements in this Quarterly Report, particularly in the Notes to Financial Statements, and "Part 1, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations," describe certain factors, among others, that could contribute to or cause such differences. Other factors that could contribute to or cause such differences include, but are not limited to, unanticipated developments in any one or more of the following areas: the receptivity of consumers to new consumer electronics technologies, the rate and consumer acceptance of new product introductions, competition, the number and nature of customers and their product orders, timely replacement of lost customers, pricing, foreign manufacturing, sourcing and sales (including foreign government regulation, trade and importation concerns and fluctuation in exchange rates), borrowing costs, the receptivity in the market place of the Company's restructuring efforts, changes in taxes due to changes in the mix of U.S. and non U.S. revenue, pending or threatened litigation, the availability of key personnel and other risk factors which may be detailed from time to time in the Company's Securities and Exchange Commission filings. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Page 14 of 15 PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. None (b) Reports on Form 8-K. -------------------- (1) Extension of warrants filed December 6, 2001. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORA ELECTRONICS, INC. (Registrant) Dated: February 20, 2002 By: \s\ Iqbal Ashraf ---------------------------------------- Iqbal Ashraf Chief Executive Officer and President Page 15 of 15

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