##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission
file number I-4334
 SUNAIR ELECTRONICS, INC.
 
  FLORIDA
    
    59-0780772(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
    
    (I.R.S. EMPLOYER
IDENTIFICATION NO.)3005 SW THIRD AVE., FT. LAUDERDALE, FL.
    
    33315(ADDRESS OR PRINCIPAL EXECUTIVE OFFICE)
    
    (ZIP CODE)
 (954) 525-1505
  
  þ o
  o þ




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PAGE NO.*************PART I. FINANCIAL INFORMATION:ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    
    3CONSOLIDATED CONDENSED BALANCE SHEETS  JUNE 30, 2005 AND SEPTEMBER 30, 2004
    
    3CONSOLIDATED CONDENSED STATEMENTS OF INCOME  NINE MONTHS ENDED JUNE 30, 2005 AND 2004
    
    5CONSOLIDATED CONDENSED STATEMENTS OF INCOME  THREE MONTHS ENDED JUNE 30, 2005 AND 2004
    
    6CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS  NINE MONTHS ENDED JUNE 30, 2005 AND 2004
    
    7NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
    
    9ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    18ITEM 3. CONTROLS AND PROCEDURES
    
    22PART II. OTHER INFORMATION
    
    22ITEM 1. LEGAL PROCEEDINGS
    
    22ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    22ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    22ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    22ITEM 5. OTHER INFORMATION
    
    22ITEM 6. EXHIBITS
    
    22SIGNATURES
    
    23Section 302 Chief Executive Officer CertificationSection 302 Chief Financial Officer CertificationSection 906 Chief Executive Officer CertificationSection 906 Chief Financial Officer Certification
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ASSETS
 06/30/05
    
    09/30/04CURRENT ASSETSCash and cash equivalents
    
    $
    3,443,300
    
    
    $
    3,872,224Accounts receivable, net
    
    
    4,699,349
    
    
    
    3,080,875Interest receivable
    
    
    
    
    
    
    108,013Inventories
    
    
    7,441,523
    
    
    
    7,258,955Investments
    
    
    
    
    
    
    2,913,601Deferred tax asset
    
    
    61,200
    
    
    
    180,725Prepaid and other current assets
    
    
    1,510,050
    
    
    
    315,469Total Current Assets
    
    
    17,155,422
    
    
    
    17,729,862NOTES RECEIVABLE
    
    
    405,590
    
    
    
    405,590PROPERTY, PLANT, AND EQUIPMENT, NET
    
    
    2,242,711
    
    
    
    703,381OTHER ASSETSCustomer List  net
    
    
    10,390,625
    
    
    
    Software costs, net
    
    
    4,126,626
    
    
    
    3,955,513Goodwill
    
    
    41,150,028
    
    
    
    852,683Total Other Assets
    
    
    55,667,279
    
    
    
    4,808,196TOTAL ASSETS
    
    $
    75,471,002
    
    
    $
    23,647,029
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LIABILITIES AND STOCKHOLDERS EQUITY
 06/30/05
    
    09/30/04CURRENT LIABILITIES:Accounts payable
    
    $
    3,225,698
    
    
    $
    1,501,864Accrued expenses
    
    
    1,640,184
    
    
    
    1,186,250Bank lines of credit
    
    
    
    
    
    
    2,047,000Unearned revenues
    
    
    1,754,550
    
    
    
    115,857Loan from shareholder
    
    
    
    
    
    
    22,800Notes payable
    
    
    104,089
    
    
    
    33,585Income taxes payable
    
    
    177,450
    
    
    
    212,688Payable in connection with
acquisition of Telecom FM
    
    
    
    
    
    
    1,500,000Total Current Liabilities
    
    
    6,901,971
    
    
    
    6,620,044LONG TERM DEBT
    
    
    16,358,701
    
    
    
    DEFERRED TAX LIABILITY
    
    
    199,200
    
    
    
    199,000STOCKHOLDERS EQUITY:Preferred stock, no par value,
8,000,000 shares authorized, none
issued and outstanding
    
    
    
    
    
    
    Common stock, $.10 par value,
100,000,000 shares authorized,
10,056,377, and 4,006,620 shares
issued and outstanding at June 30,
2005 and September 30, 2004
respectively
    
    
    1,005,638
    
    
    
    400,662Additional paid-in-capital
    
    
    37,467,470
    
    
    
    3,852,106Retained earnings
    
    
    13,540,229
    
    
    
    12,575,217Translation adjustment
    
    
    (2,207
    )
    
    
    Total Stockholders Equity
    
    
    52,011,130
    
    
    
    16,827,985TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    75,471,002
    
    
    $
    23,647,029
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NINE MONTHS ENDED06/30/05
    
    06/30/04SALES
    
    $
    17,737,834
    
    
    $
    5,951,143COST OF SALES
    
    
    10,137,798
    
    
    
    3,284,769GROSS PROFIT
    
    
    7,600,036
    
    
    
    2,666,374SELLING GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    6,494,653
    
    
    
    1,557,428INCOME FROM OPERATIONS
    
    
    1,105,383
    
    
    
    1,108,946OTHER INCOME (EXPENSE):Interest income
    
    
    255,722
    
    
    
    189,488Interest expense
    
    
    (51,357
    )
    
    
    Other
    
    
    (24,416
    )
    
    
    (19,021
    )Total Other Income (Expense)
    
    
    179,949
    
    
    
    170,467INCOME BEFORE (PROVISION) FOR INCOME TAXES
    
    
    1,285,332
    
    
    
    1,279,413(PROVISION) FOR INCOME TAXES
    
    
    (320,674
    )
    
    
    (372,100
    )NET INCOME
    
    $
    964,658
    
    
    $
    907,313NET INCOME PER COMMON SHARE:BASIC
    
    $
    0.14
    
    
    $
    0.24DILUTED
    
    $
    0.11
    
    
    $
    0.23WEIGHTED AVERAGE SHARES OUTSTANDING:BASIC
    
    
    6,704,827
    
    
    
    3,797,004DILUTED
    
    
    8,917,332
    
    
    
    3,885,942
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THREE MONTHS ENDED06/30/05
    
    06/30/04SALES
    
    $
    7,797,514
    
    
    $
    1,420,687COST OF SALES
    
    
    4,600,272
    
    
    
    765,750GROSS PROFIT
    
    
    3,197,242
    
    
    
    654,937SELLING GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    3,075,186
    
    
    
    527,254INCOME FROM OPERATIONS
    
    
    122,056
    
    
    
    127,683OTHER INCOME (EXPENSE):Interest income
    
    
    105,296
    
    
    
    65,005Interest expense
    
    
    (19,217
    )
    
    
    Other
    
    
    (6,110
    )
    
    
    (14,976
    )Total Other Income (Expense)
    
    
    79,969
    
    
    
    50,029INCOME BEFORE (PROVISION) BENEFIT FOR INCOME TAXES
    
    
    202,025
    
    
    
    177,712(PROVISION) BENEFIT FOR INCOME TAXES
    
    
    27,126
    
    
    
    (63,500
    )NET INCOME
    
    $
    229,151
    
    
    $
    114,212NET INCOME PER COMMON SHARE:BASIC
    
    $
    0.03
    
    
    $
    0.03DILUTED
    
    $
    0.02
    
    
    $
    0.03WEIGHTED AVERAGE SHARES OUTSTANDING:BASIC
    
    
    9,289,434
    
    
    
    3,816,620DILUTED
    
    
    13,468,887
    
    
    
    3,905,854
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NINE MONTHS ENDED06/30/05
    
    06/30/04CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    964,658
    
    
    $
    907,313Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    201,102
    
    
    
    118,396Amortization
    
    
    327,024
    
    
    
    21,505Deferred taxes
    
    
    119,725
    
    
    
    Translation adjustment
    
    
    (2,207
    )
    
    
    Inventories reserve
    
    
    79,300
    
    
    
    (Increase) decrease in Assets:Accounts receivable
    
    
    (113,653
    )
    
    
    471,479Interest receivable
    
    
    108,013
    
    
    
    (47,274
    )Inventories
    
    
    284,261
    
    
    
    146,497Prepaid and other current assets
    
    
    (468,254
    )
    
    
    (11,569
    )Increase (decrease) in Liabilities:Accounts payable and accrued expenses
    
    
    656,652
    
    
    
    (254,177
    )Unearned revenue
    
    
    88,082
    
    
    
    Income taxes payable
    
    
    (35,238
    )
    
    
    (341,959
    )Net Cash Provided By Operating Activities
    
    
    2,209,465
    
    
    
    1,010,211CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant, and equipment
    
    
    (152,298
    )
    
    
    (23,182
    )Proceeds from sale of held-to-maturity investment
    
    
    2,913,601
    
    
    
    Software development costs
    
    
    (388,762
    )
    
    
    Cash paid for acquisition of Telecom FM
    
    
    (1,500,000
    )
    
    
    Costs incurred for acquisition of Middleton Pest
Control, Inc.
    
    
    (38,010,541
    )
    
    
    Purchases of investments
    
    
    
    
    
    
    (501,190
    )Cash acquired in acquisition of Middleton Pest
Control, Inc.
    
    
    1,377,035
    
    
    
    Net Cash (Used In) Investing Activities
    
    
    (35,760,965
    )
    
    
    (524,372
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from line of credit
    
    
    16,000,000
    
    
    
    Proceeds from exercise of stock options
    
    
    47,138
    
    
    
    176,512Repayment of line of credit
    
    
    (7,047,000
    )
    
    
    Repayment of notes payable
    
    
    (27,965
    )
    
    
    Repayment of loan from shareholder
    
    
    (22,800
    )
    
    
    Proceeds from sale of common stock, net
    
    
    24,173,203
    
    
    
    Net Cash Provided By Financing Activities
    
    
    33,122,576
    
    
    
    176,512NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (428,924
    )
    
    
    662,351CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    3,872,224
    
    
    
    1,022,175CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    3,443,300
    
    
    $
    1,684,526
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NINE MONTHS ENDED06/30/05
    
    06/30/04SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the year for income taxes
    
    $
    400,000
    
    
    $
    718,000Cash paid during the year for interest
    
    $
    131,679
    
    
    $
    SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:Common stock issued in acquisition of
Middleton Pest Control, Inc.
    
    $
    10,000,000
    
    
    
    Note payable issued in acquisition of
Middleton Pest Control, Inc.
    
    $
    5,000,000
    
    
    
    
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1.
    
    Basis of Consolidated Financial Statement Presentation:The accompanying unaudited consolidated financial statements have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange Commission
and in accordance with the instructions to Form 10-QSB and do not include all the
information and footnote disclosures normally included in consolidated financial
statements prepared in accordance with accounting principles generally accepted in the
United States of America. The information furnished in the interim financial statements
includes normal recurring adjustments and reflects all adjustments, which, in the
opinion of management, are necessary for a fair presentation of such financial
statements. For further information refer to the consolidated financial statements and
footnotes thereto included in the Companys most recent audited consolidated financial
statements and notes thereto included in its September 30, 2004 annual report on Form
10-KSB. Operating results for the nine months ended June 30, 2005 are not necessarily
indicative of the results that may be expected for the year ending September 30, 2005.2.
    
    Significant Accounting Policies:Use of EstimatesThe preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts in the consolidated financial
statements and accompanying notes. Actual results could differ from those estimates.Accounts ReceivableAccounts receivable consist of balances due from sales. The Company monitors accounts
receivable and provides allowances when considered necessary. As of June 30, 2005 and
September 30, 2004, the Company established an allowance of $60,238 and $48,485
respectively.InvestmentsCertain investments that management has the intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums and accretion of discounts that
are recognized in interest income using the interest method over the period to maturity.Marketable and debt securities which management has classified as trading are carried at
fair value with net unrealized gains and losses reported in operations. Realized gains
and losses on marketable equity and debt securities are recognized upon sale using the
specific identification method.InventoriesInventories, which consist of raw materials, work-in-process, and finished goods, are
stated at the lower of cost or market value, cost being determined using the first in,
first out method. Fixed and variable manufacturing costs and overhead are included in
the carrying values of finished goods and work-in-process. The Company records reserves
for inventory shrinkage and obsolescence, when considered necessary. For the nine months
ended June 30, 2005, inventory shrinkage and obsolescence reserves increased $79,300.
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Property, Plant, and EquipmentProperty, plant and equipment are carried at cost. Depreciation is provided over the
estimated useful lives of the assets using both the straight-line and accelerated
methods. The estimated useful lives used to compute depreciation are as follows:
 Buildings and improvements
    
    10 to 30 yearsMachinery and equipment
    
    4 to 10 years
 The cost of maintenance and repairs is charged to expense as incurred; renewals and
betterments are capitalized. When properties are retired or otherwise disposed of, the
cost of such properties and the related accumulated depreciation are removed from the
accounts. Any profit or loss is credited, or charged to income.Software CostsThe Company capitalizes certain costs associated with software development in accordance
with statement of Financial Accounting Standard No. 86 (FASB
No. 86) Accounting for the costs
of computer software to be sold, leased, or otherwise marketed. The Company amortizes
costs over 10 years, the estimated useful life of the asset.Customer ListPursuant to the acquisition of Middleton Pest Control, Inc., the Company recorded
Customer List as an intangible asset in the amount of $10,500,000, which amount was
determined pursuant to an independent third-party appraisal. The Company is amortizing
the Customer List over its estimated economic life of eight years.Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed ofThe Company reviews long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to future undiscounted cash flows expected to be generated by the
asset. If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the assets exceeds the fair value. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to sell.
There were no assets impaired during the first nine months ended June 30, 2005.Income (Loss) Per ShareBasic earnings per share amounts are computed by dividing the net income by the weighted
average number of common shares outstanding. Diluted earnings per share amounts are
computed by dividing net income by the weighted average number of shares of common
stock, common stock equivalents, and stock options outstanding during the period.Revenue RecognitionSales revenues are recorded when products are shipped and title has passed to
unaffiliated customers. Installation revenues are considered earned at the time the
project is completed. Maintenance contracts are recorded as unearned revenues at the
time of collection and are recognized as income monthly over the term of the contract.
Interest and dividends earned on investments are recorded when earned.Advertising CostsThe Company expenses advertising costs as incurred.Research and DevelopmentExpenditures for research and development are charged to operations as incurred.
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Foreign Currency TranslationTelecoms functional currency is the British Pound Sterling, its local currency.
Accordingly, balance sheet accounts are translated at exchange rates in effect at the
end of the year and income statement accounts are translated at average exchange rates
for the year. Translation gains and losses are included as a separate component of
stockholders equity as cumulative translation adjustments.Comprehensive IncomeComprehensive income is comprised of net income and other comprehensive income. Other
comprehensive income includes certain changes in equity that are excluded from net
income. At June 30, 2005 and September 30, 2004, accumulated other comprehensive income
was comprised of cumulative foreign currency translation adjustments.3.
    
    Acquisitions:
 A)
    
    Acquisition of Percipia, Inc. and SubsidiaryFor purposes of expanding into the telecommunication market, the Company completed
its acquisition of all the issued and outstanding common stock of Percipia, Inc.
(Percipia), and its wholly owned subsidiary, Percipia Networks, Inc. on August 6,
2004. The consideration paid by the Company consisted of cash of $841,510 (including
$53,550 paid to retire all outstanding stock options of Percipia and $127,960 paid
for acquisition costs) and 190,000 shares of its common stock valued at $997,500
based on an average price of $5.25 over the thirty days prior to the acquisition for
a total purchase price of $1,839,010. As a result, Percipia became a wholly owned
subsidiary of the Company. For accounting purposes, the effective date of the
acquisition was June 30, 2004.The following table sets forth the preliminary allocation of the purchase price to
Percipias tangible and intangible assets acquired and liabilities assumed as of
July 1, 2004:
 Cash
    
    $
    17,690Accounts receivable
    
    
    425,417Inventory
    
    
    380,750Deferred tax assets
    
    
    653,000Fixed assets
    
    
    95,453Software
    
    
    2,700,000Note receivable and other assets
    
    
    80,362Goodwill
    
    
    852,683Accounts payable
    
    
    (239,098
    )Accrued liabilities
    
    
    (555,877
    )Deferred tax liability
    
    
    (860,000
    )Unearned revenues
    
    
    (145,106
    )Line of Credit
    
    
    (99,300
    )Notes Payable
    
    
    (1,428,089
    )Capital leases
    
    
    (38,875
    )Total
    
    $
    1,839,010
 The goodwill resulting from this acquisition is expected to be amortized over
fifteen years for tax purposes.
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B)
    
    Acquisition of CPM FM Limited (formerly known as Telecom FM Limited)On October 5, 2004, the Company, through a wholly owned subsidiary, Sunair
Communications, Limited, a private limited company incorporated in England (SCL),
entered into a definitive asset purchase agreement by and among SCL, CPM FM Limited
(formerly known as Telecom FM Limited) (Telecom), a private limited company
incorporated in England, and TFM Group Limited, a private limited company
incorporated in England and the sole shareholder of Telecom, pursuant to which the
Company acquired substantially all of the assets and assumed certain liabilities of
Telecom for $1,500,000 cash. The purpose of this acquisition was to expand into the
telecommunication market.In addition, the Company incurred $340,913 of transaction costs consisting
principally of legal and accounting fees.The transaction was closed on October 11, 2004 and, as stated in the asset purchase
agreement, became effective on September 1, 2004. SCL changed
its name to Telecom FM Limited shortly after the closing.The following table sets forth the allocation of the purchase price to Telecoms
tangible assets acquired and liabilities assumed as of September 1, 2004:
 Inventories
    
    $
    910,282Accounts receivable
    
    
    1,303,570Prepaid expenses and other current assets
    
    
    171,103Fixed assets
    
    
    22,763Software costs
    
    
    1,164,699Accounts payable
    
    
    (991,475
    )Bank overdraft
    
    
    (411,773
    )Accrued expenses
    
    
    (238,136
    )Loan payable
    
    
    (90,120
    )Total
    
    $
    1,840,913
 The $1,500,000 due to the principles of Telecom were accrued as payable as of
September 30, 2004. Of this amount, $1,250,000 was paid in October of 2004. Costs
accrued in connection with the acquisition of $249,312 are included in accrued
expenses as of September 30, 2004.C)
    
    Acquisition of Middleton Pest Control, Inc.On June 7, 2005, the Company, Sunair Southeast Pest Holdings, Inc., a wholly owned
subsidiary of the Company (Pest Holdings), and the selling shareholders (collectively,
the Sellers) of Middleton Pest Control, Inc., a Florida corporation (Middleton),
entered into a stock purchase agreement (the Stock Purchase Agreement) pursuant to
which, on the same date, Pest Holdings acquired from the Sellers 100% of the issued and
outstanding shares of capital stock of Middleton. The aggregate purchase price for
the outstanding capital stock of Middleton was $50,000,000, which was comprised of:
(i) $35,000,000 in cash; (ii) $5,000,000 in the form of a subordinated
promissory note; and (iii)1,028,807 shares of the Companys common stock. The Company also incurred closing costs of $1,610,541 and a charge of $1,400,000 for Middletons built-in capital gains tax for a total purchase price of
$53,010,541.
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Cash
    
    $
    1,377,035Accounts receivable
    
    
    1,504,821Inventory
    
    
    546,129Prepaid assets
    
    
    662,565Fixed assets
    
    
    1,587,781Other assets
    
    
    63,762Customer list
    
    
    10,500,000Goodwill
    
    
    40,297,345Accounts payable
    
    
    (590,377
    )Accrued liabilities
    
    
    (930,739
    )Customer deposits
    
    
    (1,550,611
    )Notes payable
    
    
    (457,170
    )Total
    
    $
    53,010,541
   NINE MONTHS ENDED JUNE 30,2005
    
    2004Revenues
    
    $
    39,000,428
    
    
    $
    32,639,335Net income
    
    $
    1,454,559
    
    
    $
    1,636,694Earnings per shareBasic
    
    $
    0.19
    
    
    $
    0.34Diluted
    
    $
    0.15
    
    
    $
    0.33
 THREE MONTHS ENDED JUNE 30,2005
    
    2004Revenues
    
    $
    13,486,948
    
    
    $
    10,998,234Net income
    
    $
    261,058
    
    
    $
    401,838Earnings per shareBasic
    
    $
    0.03
    
    
    $
    0.08Diluted
    
    $
    0.02
    
    
    $
    0.08
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06/30/05
    
    09/30/04Materials
    
    $
    1,750,947
    
    
    $
    1,565,463Work in progress
    
    
    4,806,480
    
    
    
    4,117,503Finished goods
    
    
    884,096
    
    
    
    1,575,989$
    7,441,523
    
    
    $
    7,258,955
 5.
    
    Earnings Per Common Share:
  6.
    
    Preferred Stock:
  7.
    
    Stock Options and Warrants:
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8.
    
    Equipment and Service Information:The following table sets forth sales and cost of sales information for equipment and
services in the Company.
 NINE
    
    
    THREEMONTHS
    
    
    MONTHSENDED
    
    
    ENDED06/30/05
    
    
    06/30/05SalesEquipment
    
    $
    12,498,240
    
    
    $
    3,716,779Service
    
    
    5,239,594
    
    
    
    4,080,735Total Sales
    
    $
    17,737,834
    
    
    $
    7,797,514Cost of SalesEquipment
    
    $
    7,502,943
    
    
    $
    2,422,082Service
    
    
    2,634,855
    
    
    
    2,178,190Total Cost of Sales
    
    $
    10,137,798
    
    
    $
    4,600,272
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9.
    
    Recent Accounting Pronouncements:
 Consolidation of Variable
Interest Entities
 Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities
 Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity
 Accounting for Stock-Based Compensation
 Revised
 Accounting for Stock-Based
Compensation.
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Item 2. Managements Discussion and Analysis or Plan of Operation
 
   4
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Liquidity:
       Capital Resources:
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Results of Operations:
        
 Item 3. Controls and procedures
   
  
   
   
   
   
   
  31.1
    
    Certification by Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification by Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    Certification by Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
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SUNAIR ELECTRONICS, INC.DATE: August 15, 2005
    
    /S/ JOHN J. HAYESJOHN J. HAYES, PRESIDENT
AND CHIEF EXECUTIVE OFFICERDATE: August 15, 2005
    
    /S/ SYNNOTT B. DURHAMSYNNOTT B. DURHAM,
CHIEF FINANCIAL OFFICER
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