**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C.  20549**

 

# **FORM 10-Q**

 

**QUARTERLYREPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the Quarter Ended**

 

**March31, 2004**

 

**Commission File Number 33-98404**

 
| **T.J.T.,  INC.**                                                 |
|-------------------------------------------------------------------|
| (Exact name of registrant as specified in  its charter)           |
|                                                              |   |   |
| **WASHINGTON**                                                    |   | **82-0333246** |
| (State or other jurisdiction of  incorporation or organization)   |   | (IRS Employer  Identification No.) |
|                                                              |   |   |
| **843 North Washington, P.O. Box 278, Emmett, Idaho  83617** |
| (Address of principal executive offices)                          |
|                                                              |   |   |
| **(208) 365-5321**                                                |
| (Issuer’s telephone number)                                  |

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and(2) has been subject to such filing requirements the past 90 days.  Yes ý  No o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in the Exchange Act Rule12d-2).  Yes oNo ý

 

At March 31, 2004, the registrant had 4,504,939 shares of common stockoutstanding.

 

 

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**T.J.T.,INC.**

**Form10-Q**

**March31, 2004**

 

**TABLEOF CONTENTS**

 

**PARTI.  FINANCIAL INFORMATION**

 
| Item 1.  Financial Statements  (Unaudited)                                                            |                                                                                       |
|------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|                                                                                                       |                                                                                       |   |
|                                                                                                       | Balance  Sheets at March 31, 2004 and September 30, 2003                                   |   |
|                                                                                                       |                                                                                       |   |
|                                                                                                       | Statements of Operation for the Three  Months and Six Months Ended March 31, 2004 and 2003 |   |
|                                                                                                       |                                                                                       |   |
|                                                                                                       | Statements of Cash Flows for the Six Months  Ended March 31, 2004 and 2003                 |   |
|                                                                                                       |                                                                                       |   |
|                                                                                                       | Notes to Financial Statements                                                              |   |
|                                                                                                       |                                                                                       |   |
| Item 2.   Management’s Discussion and Analysis of Financial Condition and  Results of Operations |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 3.  Quantitative and Qualitative Disclosure about Market Risk                                    |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 4.   Controls and Procedures                                                                     |                                                                                       |
|                                                                                                       |                                                                                       |   |
| **PART  II.  OTHER INFORMATION**                                                                      |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 1.  Legal Proceedings                                                                            |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 2.  Changes in Securities  and Use of Proceeds                                                   |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 3.  Defaults Upon Senior  Securities                                                             |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 4.   Submission of Matters to a Vote of Security Holders                                         |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 5.  Other Information                                                                            |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Item 6.   Exhibits and Reports on Form 8-K                                                            |                                                                                       |
|                                                                                                       |                                                                                       |   |
| Signatures                                                                                                 |                                                                                       |   |
|                                                                                                       |                                                                                       |   |
| Section 302 Certifications                                                                                 |                                                                                       |

 

2

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**T.J.T., INC.**

**BALANCE SHEETS**

**(Dollars in thousands)**

 
|                                                                                                         |   | **Mar. 31  2004** |   | **Sept. 30  2003** |   |
|--------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------------------|--------|
|                                                                                                         |   |              |   |               |   |
| Current assets:                                                                                              |   |              |   |               |   |
| Cash and cash equivalents                                                                                    |   | $                 | 983    |               | $      | 1,072 |   |
| Accounts receivable (net of allowance for  doubtful accounts of $17 and $68)                                 |   | 965               |   | 1,336              |   |
| Notes receivable                                                                                             |   | 91                |   | 38                 |   |
| Inventories                                                                                                  |   | 2,605             |   | 2,566              |   |
| Prepaid expenses and other current assets                                                                    |   | 153               |   | 107                |   |
| Total current assets                                                                                         |   | 4,797             |   | 5,119              |   |
|                                                                                                         |   |              |   |               |   |
| Property, plant and equipment, net of  accumulated depreciation                                              |   | 715               |   | 594                |   |
|                                                                                                         |   |              |   |               |   |
| Notes receivable                                                                                             |   | 313               |   | 323                |   |
| Notes receivable from related parties                                                                        |   | 70                |   | 89                 |   |
| Real estate held for investment                                                                              |   | 318               |   | 341                |   |
| Investment in joint venture                                                                                  |   | 530               |   | 452                |   |
| Other assets                                                                                                 |   | 173               |   | 174                |   |
| Deferred tax asset                                                                                           |   | 369               |   | 450                |   |
| Total assets                                                                                                 |   | $                 | 7,285  |               | $      | 7,542 |   |
|                                                                                                         |   |              |   |               |   |
| Current liabilities:                                                                                         |   |              |   |               |   |
| Accounts payable                                                                                             |   | $                 | 680    |               | $      | 864 |   |
| Accrued liabilities                                                                                          |   | 354               |   | 549                |   |
| Total current liabilities                                                                                    |   | 1,034             |   | 1,413              |   |
|                                                                                                         |   |              |   |               |   |
| Deferred income and other noncurrent  obligations                                                            |   | 81                |   | 79                 |   |
| Total liabilities                                                                                            |   | 1,115             |   | 1,492              |   |
|                                                                                                         |   |              |   |               |   |
| Shareholders’ equity:                                                                                   |   |              |   |               |   |
| Preferred stock, $.001 par value; 5,000,000  shares authorized; 0 shares issued and outstanding              |   | —            |   | —             |   |
| Common stock, $.001 par value; 10,000,000  shares authorized;  4,504,939 shares  issued and outstanding |   | 5                 |   | 5                  |   |
| Capital surplus                                                                                              |   | 5,789             |   | 5,788              |   |
| Retained earnings                                                                                            |   | 376               |   | 257                |   |
| Total shareholders’ equity                                                                              |   | 6,170             |   | 6,050              |   |
| Total liabilities and shareholders’ equity                                                              |   | $                 | 7,285  |               | $      | 7,542 |   |

 

See accompanying notes to financialstatements.

 

3

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**T.J.T., INC.**

**STATEMENTS OF OPERATION**

**(Dollars in thousands except per share amounts)**

 
|                                          |   | **Three  Months Ended  March 31,** |   | **Six Months  Ended  March 31,** |   |
|-----------------------------------------------|--------|------------------------------------|--------|----------------------------------|--------|
|                                          |   | **2004**                           |   | **2003**                         |   | **2004** |   | **2003** |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Sales (net of returns and allowances):        |   |                               |   |                             |   |   |   |   |   |
| Axles and tires                               |   | $                                  | 3,414  |                             | $      | 3,638 |   | $ | 6,740 |   | $ | 7,425 |   |
| Accessories and siding                        |   | 923                                |   | 933                              |   | 1,974 |   | 2,064 |   |
| Total sales                                   |   | 4,337                              |   | 4,571                            |   | 8,714 |   | 9,489 |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Cost of goods sold                            |   |                               |   |                             |   |   |   |   |   |
| Axles and tires                               |   | 2,636                              |   | 3,098                            |   | 5,228 |   | 6,180 |   |
| Accessories and siding                        |   | 618                                |   | 624                              |   | 1,339 |   | 1,424 |   |
| Total cost of goods sold                      |   | 3,254                              |   | 3,722                            |   | 6,567 |   | 7,604 |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Gross profit                                  |   | 1,083                              |   | 849                              |   | 2,147 |   | 1,885 |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Selling, general and administrative  expenses |   | 1,094                              |   | 1,141                            |   | 2,122 |   | 2,179 |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Operating income (loss)                       |   | (11                                | )      | (292                             | )      | 25 |   | (294 | ) |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Interest income                               |   | 11                                 |   | 12                               |   | 25 |   | 25 |   |
| Investment property income                    |   | (2                                 | )      | 23                               |   | 29 |   | 23 |   |
| Income from joint venture                     |   | 79                                 |   | —                           |   | 78 |   | — |   |
| Rental income                                 |   | 22                                 |   | 4                                |   | 33 |   | 6 |   |
|  

Other income                          |   | 10                                 |   | 8                                |   | 10 |   | 8 |   |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Income (loss) before taxes                    |   | 109                                |   | (245                             | )      | 200 |   | (232 | ) |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Income taxes (benefit)                        |   | 45                                 |   | (90                              | )      | 81 |   | (83 | ) |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Net income (loss)                             |   | $                                  | 64     |                             | $      | (155 | ) | $ | 119 |   | $ | (149 | ) |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Net income (loss) per common share            |   |                               |   |                             |   |   |   |   |   |
| Basic and fully diluted:                      |   |                               |   |                             |   |   |   |   |   |
| Continuing operations                         |   | $                                  | .01    |                             | $      | (.03 | ) | $ | .03 |   | $ | (.03 | ) |
| Net income (loss)                             |   | $                                  | .01    |                             | $      | (.03 | ) | $ | .03 |   | $ | (.03 | ) |
|                                          |   |                               |   |                             |   |   |   |   |   |
| Weighted average shares outstanding           |   | 4,504,939                          |   | 4,504,939                        |   | 4,504,939 |   | 4,504,939 |   |

 

Seeaccompanying notes to financial statements.

 

4

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**T.J.T., INC.**

**STATEMENTS OF CASH FLOWS (unaudited)**

**(Dollars in thousands)**

 
| **For the six months ended March 31,**                                             |   | **2004** |   | **2003** |   |
|------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|
| Cash flows from operating activities:                                              |   |     |   |     |   |
| Net income (loss)                                                                  |   | $        | 119    |     | $      | (149 | ) |
| Adjustments to reconcile net income to net  cash provided by operating activities: |   |     |   |     |   |
| Depreciation and amortization                                                      |   | 89       |   | 120      |   |
| (Gain) loss on sale of assets                                                      |   | (39      | )      | (32      | )      |
| Equity earnings in joint venture                                                   |   | (78      | )      | —   |   |
| Stock compensation                                                                 |   | 1        |   | —   |   |
| Change in receivables                                                              |   | 372      |   | (106     | )      |
| Change in inventory                                                                |   | (39      | )      | (647     | )      |
| Change in prepaid expenses and other  current assets                               |   | (46      | )      | (2       | )      |
| Change in accounts payable                                                         |   | (184     | )      | 234      |   |
| Change in taxes                                                                    |   | 81       |   | (84      | )      |
| Change in other assets and liabilities                                             |   | (192     | )      | (34      | )      |
|                                                                               |   |     |   |     |   |
| Net cash provided (used) by operating activities                                   |   | 84       |   | (700     | )      |
|                                                                               |   |     |   |     |   |
| Cash flows from investing activities:                                              |   |     |   |     |   |
| Additions to property, plant and equipment                                         |   | (210     | )      | (48      | )      |
| Proceeds from sale of assets                                                       |   | 10       |   | 8        |   |
| Issuance of notes receivable                                                       |   | (10      | )      | —   |   |
| Payments on notes receivable                                                       |   | 26       |   | 46       |   |
| Land purchased for investment                                                      |   | (25      | )      | —   |   |
| Sale of land purchased for investment                                              |   | 36       |   | 99       |   |
|                                                                               |   |     |   |     |   |
| Net cash provided (used) by investing  activities                                  |   | (173     | )      | 105      |   |
|                                                                               |   |     |   |     |   |
| Net decrease in cash and cash equivalents                                          |   | (89      | )      | (595     | )      |
| Cash and cash equivalents at October 1                                             |   | 1,072    |   | 767      |   |
|                                                                               |   |     |   |     |   |
| Cash and cash equivalents at March 31                                              |   | $        | 983    |     | $      | 172 |   |
|                                                                               |   |     |   |     |   |
| Supplemental information:                                                          |   |     |   |     |   |
| Interest paid                                                                      |   | $        | 1      |     | $      | 1 |   |
| Sale of land by issuance of note receivable                                        |   | 35       |   | 120      |   |

 

Seeaccompanying notes to financial statements.

 

5

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T.J.T., INC.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

 

NOTE A – BASIS OF PRESENTATION

 

*Unaudited FinancialStatements*

 

In the opinion of management,the accompanying unaudited financial statements contain all adjustments(consisting solely of normal recurring adjustments) necessary to present fairlythe financial position of T.J.T., Inc. (the “Company”) and the results ofoperations and cash flows.  Certainreclassifications of prior quarter amounts were made to conform with currentquarter presentation, none of which affect previously recorded net income.

 

*Stock Options*

 

The Company has a stock option plan which allows officers, directorsand key employees of the company to receive non-qualified and incentive stockoptions.  The Company awarded 20,000stock options to directors during the quarter ended March 31, 2004 withexercise prices ranging from $.70 to $.80. No options were granted during the quarter ended December 31, 2003.  All options granted will become vested at arate of 20 percent each year for a period of five years from the grantdate.  As of March 31, 2004, 350,000shares of stock were available for future option grants.

 

As of October 1, 2003, the Company adopted the fair value method ofaccounting for stock options contained in Statement of Financial Standards(“SFAS”) No. 123, *Accounting for Stock-Based Compensation.*  During the transition period, the Companywill be utilizing the prospective method under SFAS No. 148 *Accountingfor Stock-Based Compensation — Transition and Disclosures. *Stock options granted subsequentto October 1, 2003 will be expensed over the stock option vesting period basedon fair value which will be determined using the Black-Scholes option-pricingmethod at the date the options are granted. Stock-based compensation for the six months ending March 31, 2004 was$634; the net of tax impact on the financial statements for the period was $380and because of rounding is not added back to reported net income in the tablebelow.

 

The following table illustrates the effect on net income (loss) and netincome (loss) per common share as if the fair value method had been applied toall outstanding and unvested awards in each period:

 
|                                                                                                                        |   | **Three  Months Ended** |   | **Six Months  Ended** |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|-----------------------|--------|
| **(Dollars in thousands, except per share amounts)**                                                                        |   | **Mar. 31,  2004**      |   | **Mar. 31,  2003**    |   | **Mar.31,  2004** |   | **Mar. 31,  2003** |   |
|                                                                                                                        |   |                    |   |                  |   |   |   |   |   |
| Net income (loss), as reported                                                                                              |   | $                       | 64     |                  | $      | (155 | ) | $ | 119 |   | $ | (149 | ) |
|                                                                                                                        |   |                    |   |                  |   |   |   |   |   |
| Add:   stock-based employee compensation expense included in reported net  income, net of tax                          |   | —                  |   | —                |   | — |   | — |   |
| Deduct:   stock-based compensation   expense determined under fair value   method for all awards, net of tax |   | 2                       |   | 2                     |   | 4 |   | 5 |   |
|                                                                                                                        |   |                    |   |                  |   |   |   |   |   |
| Pro forms net income (loss)                                                                                                 |   | $                       | 62     |                  | $      | (157 | ) | $ | 115 |   | $ | (154 | ) |
|                                                                                                                        |   |                    |   |                  |   |   |   |   |   |
| Earnings per share:                                                                                                         |   |                    |   |                  |   |   |   |   |   |
| Basic – as reported                                                                                                    |   | $                       | .01    |                  | $      | (.03 | ) | $ | .03 |   | $ | (.03 | ) |
| Basic - pro forma                                                                                                           |   | $                       | .01    |                  | $      | (.04 | ) | $ | .03 |   | $ | (.03 | ) |

 

6

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NOTE B - INVENTORIES

 

Inventories are stated at the lower of cost (first-in, first-out andaverage cost methods) or market.

 
| **(Dollars in thousands)** |   | **Mar. 31,  2004** |   | **Sept. 30,  2003** |   |
|----------------------------|--------|--------------------|--------|---------------------|--------|
| Raw materials              |   | $                  | 1,355  |                | $      | 1,284 |   |
| Finished goods             |   | 1,250              |   | 1,282               |   |
| Total                      |   | $                  | 2,605  |                | $      | 2,566 |   |

 

NOTE C – PROPERTY, PLANT AND EQUIPMENT

 
| **(Dollars in thousands)**        |   | **Mar. 31,  2004** |   | **Sept. 30,  2003** |   |
|-----------------------------------|--------|--------------------|--------|---------------------|--------|
| Land and building                 |   | $                  | 386    |                | $      | 386 |   |
| Leasehold improvements            |   | 282                |   | 399                 |   |
| Furniture and equipment           |   | 1,179              |   | 1,153               |   |
| Vehicles and trailers             |   | 1,089              |   | 1,060               |   |
|                              |   | 2,936              |   | 2,998               |   |
| Less accumulated depreciation     |   | 2,221              |   | 2,404               |   |
| Net property, plant and equipment |   | $                  | 715    |                | $      | 594 |   |

 

NOTE D - SHAREHOLDERS’ EQUITY

 

Authorized stock of the company consists of 10,000,000 shares of $.001par value common stock and 5,000,000 shares of $.001 par value preferredstock.  No shares of preferred stockhave been issued.

 

NOTE E – SEGMENT DISCLOSURE

 

The Company operates in twobusiness segments: Axles and Tire Reconditioning and Housing Accessories. Thesesegments have been determined by evaluating the Company’s internal reportingstructure and nature of products offered.

 

7

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Axles and TireReconditioning: The Company provides reconditioned axles and tires tomanufactured housing factories.

 

HousingAccessories: The Company provides skirting, siding, and other aftermarketaccessories to manufactured housing dealers and contractors.

 
| **(Dollars in thousands)**       |   | **Axle &  Tire  Reconditioning** |   | **Housing  Accessories** |   | **Total** |   |
|----------------------------------|--------|--------------------------------------|--------|--------------------------|--------|-----------|--------|
|                             |   |                                 |   |                     |   |      |   |
| Three months ended Mar. 31, 2004 |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 3,414  |                     | $      | 923       |   | $ | 4,337 |   |
| Operating income (loss)          |   | 84                                   |   | (95                      | )      | (11       | )      |
| Depreciation                     |   | 25                                   |   | 13                       |   | 38        |   |
|                             |   |                                 |   |                     |   |      |   |
| Three months ended Mar. 31, 2003 |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 3,638  |                     | $      | 933       |   | $ | 4,571 |   |
| Operating income (loss)          |   | (198                                 | )      | (94                      | )      | (292      | )      |
| Depreciation                     |   | 56                                   |   | 6                        |   | 62        |   |
|                             |   |                                 |   |                     |   |      |   |
| Six months ended Mar. 31, 2004   |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 6,740  |                     | $      | 1,974     |   | $ | 8,714 |   |
| Operating income (loss)          |   | 128                                  |   | (103                     | )      | 25        |   |
| Depreciation                     |   | 61                                   |   | 28                       |   | 89        |   |
|                             |   |                                 |   |                     |   |      |   |
| Six months ended Mar. 31, 2003   |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 7,425  |                     | $      | 2,064     |   | $ | 9,489 |   |
| Operating income (loss)          |   | (199                                 | )      | (95                      | )      | (294      | )      |
| Depreciation                     |   | 96                                   |   | 24                       |   | 120       |   |

 

The Companydoes not assign interest income, interest expense, other expenses or incometaxes to operating segments. Identifiable assets and related capitalexpenditures are assigned to operating locations rather than operatingsegments, with depreciation allocated to the segments based upon usage.

 

 

### **Item 2.Management’s Discussion and Analysis of Financial Condition and Results of**

** Operations**

 

This Form 10-Q contains certainforward-looking statements which are based on management’s currentexpectations.  These forward-lookingstatements are subject to certain risks and uncertainties. The words “believe,”“expect,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could,” andother expressions that indicate future events and trends identifyforward-looking statements.  The Companyhas identified risk factors which could cause actual results to differsubstantially from the forward-looking statements.  These risk factors include, but are not limited to, generaleconomic conditions, changes in interest rates, availability of financing forboth

 

8

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manufactured home buyers andsuppliers, real estate values, adverse weather conditions, the economicviability of our customers and vendors, and availability of qualifiedemployees.  In addition, industryconditions that may have an adverse impact on future results include, but arenot limited to, low barriers of entry, changes and/or enforcement inlegislation or regulations, and competitive pressure on both the purchasing ofused axles and tires from manufactured housing dealers and the selling ofrefurbished axles and tires to manufactured housing factories.

** **

T.J.T., Inc. has two business lines: repairing andreconditioning axles and tires for the manufactured housing industry, anddistribution of after-market accessory products to manufactured housing dealersand set-up contractors, as well as siding to site builders.

 

The Company has recyclingand distribution locations in Emmett, Idaho; Woodland, California; Platteville,Colorado; and Chehalis, Washington.  TheCompany also manufactures hanger parts in Eugene, Oregon which are used by themanufactured housing producers to attach axles to homes.  The Company operates in Arizona and NewMexico through NewCo Axle & Tire, L.L.C. (“NewCo”), a joint venture limitedliability corporation.  NewCo isinvestigating opportunities in the Texas market as well.

 

**Results of Operations**

 

The manufactured housing industry continues to experience lowerproduction levels as a result of more restrictive credit standards andcontinuation of excessive repossessions. In the Company’s market area manufactured housing shipments decreasedfour percent from the quarter ended March 31, 2004 as compared to the quarterended March 31, 2003 according to statistics from the National Conference ofStates on Building Codes and Standards. Company net sales declined eight percent during that same period;however, net sales for the 2003 quarter included sales from the Arizonafacility, which was closed in June of 2003.

 

The following table sets forth the operating data of the Company as apercentage of net sales for

the periods listed below:

 
|                                        |   | **Three  Months Ended** |   | **Six Months  Ended** |   |
|---------------------------------------------|--------|-------------------------|--------|-----------------------|--------|
|                                        |   | **Mar. 31,  2004**      |   | **Mar. 31,  2003**    |   | **Mar. 31,  2004** |   | **Mar. 31,  2003** |   |
| Axle and tire reconditioning                |   | 78.7                    | %      | 79.6                  | %      | 77.3 | % | 78.2 | % |
| Manufactured housing accessories and siding |   | 21.3                    |   | 20.4                  |   | 22.7 |   | 21.8 |   |
| Gross margin                                |   | 25.0                    |   | 18.6                  |   | 24.6 |   | 19.9 |   |
| Selling expense                             |   | 16.5                    |   | 16.8                  |   | 16.0 |   | 16.0 |   |
| Administrative expense                      |   | 8.7                     |   | 8.1                   |   | 8.4 |   | 6.9 |   |
| Interest income                             |   | 0.3                     |   | 0.3                   |   | 0.3 |   | 0.3 |   |
| Other income                                |   | 0.2                     |   | 0.2                   |   | 0.1 |   | 0.1 |   |

 

***Net Sales***

 

Net sales declined $234,000 in the three months ending March 31, 2004,compared to the same quarter in 2003. The five percent decline was a result of the closure of the Arizonalocation

 

9

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which contributed $782,000 of net sales during the 2003 period.  Net sales of the remaining locationsincreased $548,000 or 14 percent.

 

Sales for the six month period ending March 31, 2004, declined eightpercent or $775,000 as compared to the same period a year ago.  The Arizona location contributed $1,390,000in sales during the six months ending March 31, 2003.  Sales at the remaining locations increased $614,000 in thecurrent period as compared to the same six month period in 2003 as a result ofhigher volume of axle and tire sales partially offset by an $85,000 decrease insales of dealer accessory items.

 

***Gross Profit***

 

The Company’s gross profit increased six percent in the three monthperiod and five percent in the six month period ending March 31, 2004, ascompared to the same three and six month periods a year ago.  The closure of the Arizona facility in June2003 positively impacted gross margin by approximately three percent in thequarter ending March 31, 2004 and two percent during the six months endingMarch 31, 2004.  Increased efficiencydue to higher sales volumes of continuing operations was also a majorcontributor.

 

***Selling, General andAdministrative***

 

Selling, general and administrative expense decreased by four and threepercent during the three and six month periods of 2004 as compared to the sameperiods in fiscal year 2003.  Thedecrease was the result of reduced selling, general and administrative costsassociated with the closure of the Arizona facility of $84,000 and $191,000 inthe three month and six month periods respectively, which were partially offsetby increased administrative expense at the California and Colorado locations,as well as increased corporate expense.

 

***Net income***

 

Net income for the quarter ending March 31, 2004, was $64,000 or $.01per share compared to a loss of $155,000 or $.03 per share in the same period ayear ago.  Net income for six monthsending March 31, 2004, was $119,000 or $.03 per share compared to a loss of$149,000 or $.03 per share in the same period a year ago.  The increase was in part due to improvedoperating results at our California and Colorado locations.  The Company’s Arizona location had incurredlosses prior to being closed in June 2003, which also contributed to theincrease in net income for the six month 2004 period.

 

The Company recognized net income of $79,000 and $78,000 for three andsix month periods ending March 31, 2004 associated with NewCo, the jointventure.  The Company entered into thejoint venture with West States Recycling in June 2003 with a 50 percentownership interest and receives 40 percent of the profit or loss.  In addition, the Company also receivesrental income from equipment leased to the joint venture.

 

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## **Liquidity and Capital Resources**

 

The Company’s decrease in net cash for thesix months ended March 31, 2004 was $89,000. Operating activities for the period provided cash flow of $84,000compared to $700,000 of cash used for operations in the same six month period ayear ago.  The change from period toperiod is primarily due to less inventory being purchased, positive netcollections in accounts receivable, and a significant decrease in healthinsurance costs as a result of changing from a self-insured plan to atraditional health plan.

 

Net cash used by investing activities was$173,000 during the six months ended March 31, 2004 while investing activitiesduring the same period in 2003 provided cash of $105,000.  During the period the Company investedapproximately $122,000 in leasehold improvements made to the Chehalis,Washington site and the Eugene, Oregon facility.  The Company invested approximately $55,000 during the six monthperiod in trailers and equipment primarily to assist with increasing salesvolumes at the Colorado facility.

 

TheCompany expects that cash flow from operations combined with the line of creditwill be a sufficient source of liquidity to fund operations.  The Company has a $350,000 revolving creditfacility with a financial institution secured by receivables andinventory.  As of March 31, 2004, theCompany has not borrowed on the line and is in compliance with all loancovenants.   The Company renewed the$350,000 line of credit on March 31, 2004 with the same financialinstitution.  The interest rate on thecredit line is the prime rate plus one percent.

 

**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

 

The Company is not required to provide this information pursuant toItem 305(e) of Regulation S-K.

 

**Item 4. Controls and Procedures**

 

 (a)                               **Evaluationof Disclosure Controls and Procedures**

 

Based on their evaluation as of a date within 90 days of the filingdate of this Report on Form 10-Q, the Company’s principal executive officer andprincipal financial officer have concluded that the Company’s disclosurecontrols and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under theSecurities Exchange Act of 1934 (the “Exchange Act”) are effective to ensure thatmaterial information required to be disclosed by the Company in reports that itfiles or submits under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in Securities and ExchangeCommission rules and forms.

 

(b)                               **Changes in Internal Controls**

 

There were no significant changes in the Company’s internal controls orin other factors that could significantly affect the controls subsequent to thedate of their evaluation.

 

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There were no significant deficiencies or material weaknesses, andtherefore there were no corrective actions taken.

 

**PART II. ****OTHER INFORMATION**

 

**Item 1.      Legal Proceedings**

 

Nothing to Report

 

### **Item 2. Changes inSecurities**

 

Nothing to report

 

### **Item3. Defaults Upon Senior Securities**

 

Nothing to report

 

### **Item 4. Submissionof Matters to a Vote of Security Holders**

 

On February 17, 2004, the annual meeting of the shareholders washeld.  Holders of common stock wereasked to vote on the following:

 

To elect three Directors to serve until the annual meeting ofshareholders in 2007, or until their successors are duly elected andqualified.  The shareholders elected thefollowing Directors, with the votes indicated opposite each Director’s name:

 
|             |   | **For**   |   | **Against** |   | **Withheld** |   |
|------------------|--------|-----------|--------|-------------|--------|--------------|--------|
|             |   |      |   |        |   |         |   |
| Susan M. Allison |   | 4,323,922 |   | —      |   | 33,050       |   |
| Arthur J. Berry  |   | 4,323,922 |   | —      |   | 33,050       |   |
| Ulysses B. Mori  |   | 4,323,922 |   | —      |   | 33,050       |   |

 

**Item 5.      Other Information**

 

Nothing to report

 

**6.  Exhibits andReports on Form 8-K**

 

(a)                                  Exhibit 31.1Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section906 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 Certification Pursuant to 18 U.S.C. Section 1350, asAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(b)                                 The Company did notissue a Form 8-K during the three months ended March 31, 2004.

 

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## **SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has caused this report to be signed on its behalf by theundersigned hereunto duly authorized.

 
|   |         |    | T.J.T., INC.                                                          |
|--------|--------------|---------|-----------------------------------------------------------------------|
|   |         |    | Registrant                                                            |
|   |         |    |                                                                  |
| Date:  | May 13, 2004 | By:/s// | Larry B. Prescott                                                     |
|   |         |    | Larry B. Prescott, Senior Vice President and  Chief Financial Officer |

 

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