**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C.  20549**

 

# **FORM 10-Q**

 

**QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934**

 

**Forthe Quarter Ended**

 

**March 31, 2003**

 

**CommissionFile 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 markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements the past 90days.  Yes  ý    No o

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in the Exchange ActRule 12d-2).  Yes  o   No  ý

 

At March 31, 2003, theregistrant had 4,504,939 shares of common stock outstanding.

 

 

----

 

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

**Form 10-Q**

**March 31, 2003**

 

**TABLE OF CONTENTS**

 
| **PART I.  FINANCIAL INFORMATION** |
|-----------------------------------------|
|                                    |
| Item 1.                                 |  Financial Statements (Unaudited) |
|                                    |
|                                    | Balance Sheets at March 31, 2003 and  September 30, 2002 |
|                                    |   |
|                                    | Statements of Operation for the Three  Months and Six Months Ended March 31, 2003 and 2002 |
|                                    |   |
|                                    | Statements of  Cash Flows for the Six Months Ended March 31, 2003 and 2002 |
|                                    |   |
|                                    | 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 inthousands)

 
|                                                                                                        |   | **March 31,  2003** |   | **Sept. 30,  2002** | ** ** |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|---------------------|------------|
|                                                                                                        |   |                |   |                |       |
| Current  assets:                                                                                            |   |                |   |                |       |
| Cash  and cash equivalents                                                                                  |   | $                   | 172    |                | $          | 767 |   |
| Accounts  receivable and notes receivable (net of allowances for doubtful accounts of  $122 and $129)       |   | 1,370               |   | 1,247               |       |
| Inventories                                                                                                 |   | 3,240               |   | 2,593               |       |
| Prepaid  expenses and other current assets                                                                  |   | 101                 |   | 99                  |       |
| Total  current assets                                                                                       |   | 4,883               |   | 4,706               |       |
|                                                                                                        |   |                |   |                |       |
| Property,  plant and equipment, net of accumulated depreciation                                             |   | 629                 |   | 699                 |       |
|                                                                                                        |   |                |   |                |       |
| Notes  receivable                                                                                           |   | 344                 |   | 232                 |       |
| Notes  receivable from related parties                                                                      |   | 101                 |   | 156                 |       |
| Real  estate held for investment                                                                            |   | 341                 |   | 523                 |       |
| Other  assets                                                                                               |   | 135                 |   | 135                 |       |
| Deferred  tax asset                                                                                         |   | 623                 |   | 539                 |       |
| Total  assets                                                                                               |   | $                   | 7,056  |                | $          | 6,990 |   |
|                                                                                                        |   |                |   |                |       |
| Current  liabilities:                                                                                       |   |                |   |                |       |
| Accounts  payable                                                                                           |   | $                   | 889    |                | $          | 655 |   |
| Accrued  liabilities                                                                                        |   | 308                 |   | 334                 |       |
| Total  current liabilities                                                                                  |   | 1,197               |   | 989                 |       |
|                                                                                                        |   |                |   |                |       |
| Deferred  credits and other noncurrent obligations                                                          |   | 90                  |   | 83                  |       |
| Total  liabilities                                                                                          |   | 1,287               |   | 1,072               |       |
|                                                                                                        |   |                |   |                |       |
| 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                                                                                            |   | 5,788               |   | 6,181               |       |
| Retained  earnings (deficit)                                                                                |   | (24                 | )      | 125                 |       |
| Treasury  stock (349,800 shares at cost)                                                                    |   | —              |   | (393                | )          |
| Total  shareholders’ equity                                                                            |   | 5,769               |   | 5,918               |       |
| Total  liabilities and shareholders’ equity                                                            |   | $                   | 7,056  |                | $          | 6,990 |   |

 

See accompanyingnotes to financial statements.

 

3

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T.J.T., INC.

STATEMENTS OF OPERATION

(Dollars inthousands except per share amounts)

 
|                                                         |   | **Three  Months Ended  March 31,** | ** ** | **Six Months  Ended  March 31,** | ** ** |
|--------------------------------------------------------------|--------|------------------------------------|------------|----------------------------------|------------|
|                                                         |   | **2003**                           |       | **2002**                         | ** ** | **2003** | ** ** | **2002** | ** ** |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Sales  (net of returns and allowances):                      |   |                               |       |                             |       |   |   |   |   |
| Axles  and tires                                             |   | $                                  | 3,638      |                             | $          | 3,898 |   | $ | 7,425 |   | $ | 7,212 |   |
| Accessories  and siding                                      |   | 933                                |       | 1,010                            |       | 2,064 |   | 2,091 |   |
| Total  sales                                                 |   | 4,571                              |       | 4,908                            |       | 9,489 |   | 9,303 |   |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Cost  of goods sold                                          |   |                               |       |                             |       |   |   |   |   |
| Axles  and tires                                             |   | 3,098                              |       | 3,227                            |       | 6,180 |   | 5,849 |   |
| Accessories  and siding                                      |   | 624                                |       | 734                              |       | 1,424 |   | 1,472 |   |
| Total  cost of goods sold                                    |   | 3,722                              |       | 3,961                            |       | 7,604 |   | 7,321 |   |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Gross  profit                                                |   | 849                                |       | 947                              |       | 1,885 |   | 1,982 |   |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Selling,  general and administrative expenses                |   | 1,141                              |       | 1,210                            |       | 2,179 |   | 2,424 |   |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Operating  income (loss)                                     |   | (292                               | )          | (263                             | )          | (294 | ) | (442 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Interest  income                                             |   | 12                                 |       | 15                               |       | 25 |   | 26 |   |
| Investment  property income                                  |   | 27                                 |       | 25                               |       | 29 |   | 37 |   |
| Other  income                                                |   | 8                                  |       | (1                               | )          | 8 |   | 4 |   |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Income  (loss) before taxes                                  |   | (245                               | )          | (224                             | )          | (232 | ) | (375 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Income  taxes (benefit)                                      |   | (90                                | )          | (78                              | )          | (83 | ) | (136 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Income  (loss) before cumulative effect of accounting change |   | (155                               | )          | (146                             | )          | (149 | ) | (239 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Cumulative  effect of accounting change, net of income taxes |   | —                             |       | —                           |       | — |   | (748 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Net  income (loss)                                           |   | $                                  | (155       | )                                | $          | (146 | ) | $ | (149 | ) | $ | (987 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Net income (loss) per common share   Continuing operations   |   | $                                  | (.03       | )                                | $          | (.03 | ) | $ | (.03 | ) | $ | (.05 | ) |
| Cumulative  effect of accounting change                      |   | —                             |       | —                           |       | — |   | (0.17 | ) |
| Net  income (loss)                                           |   | $                                  | (.03       | )                                | $          | (.03 | ) | $ | (.03 | ) | $ | (.22 | ) |
|                                                         |   |                               |       |                             |       |   |   |   |   |
| Weighted  average shares outstanding                         |   | 4,504,939                          |       | 4,504,939                        |       | 4,504,939 |   | 4,504,939 |   |

 

See accompanyingnotes to financial statements.

 

4

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T.J.T., INC.

STATEMENTS OF CASH FLOWS

(Dollars inthousands)

 
|                                                                               |   | **For the  six months ended  March 31,** | ** ** |
|------------------------------------------------------------------------------------|--------|------------------------------------------|------------|
|                                                                               |   | **2003**                                 |       | **2002** | ** ** |
|                                                                               |   |                                     |       |   |   |
| Cash  flows from operating activities:                                             |   |                                     |       |   |   |
| Net  loss                                                                          |   | $                                        | (149       | ) | $ | (987 | ) |
| Adjustments  to reconcile net income to net cash provided by operating activities: |   |                                     |       |   |   |
| Depreciation  and amortization                                                     |   | 120                                      |       | 210 |   |
| Cumulative  effect of accounting change                                            |   | —                                   |       | 748 |   |
| Gain  on sale of assets                                                            |   | (32                                      | )          | (30 | ) |
| Change  in receivables                                                             |   | (106                                     | )          | 81 |   |
| Change  in inventories                                                             |   | (647                                     | )          | (401 | ) |
| Change  in prepaid expenses and other current assets                               |   | (2                                       | )          | (28 | ) |
| Change  in accounts payable                                                        |   | 234                                      |       | 299 |   |
| Change  in taxes                                                                   |   | (84                                      | )          | (137 | ) |
| Change  in other assets and liabilities                                            |   | (34                                      | )          | (99 | ) |
| Net  cash used by operating activities                                             |   | (700                                     | )          | (344 | ) |
|                                                                               |   |                                     |       |   |   |
| Cash  flows from investing activities:                                             |   |                                     |       |   |   |
| Additions  to property, plant and equipment                                        |   | $                                        | (48        | ) | $ | (29 | ) |
| Proceeds  from sale of assets                                                      |   | 8                                        |       | 8 |   |
| Issuance  of notes receivable                                                      |   | —                                   |       | (5 | ) |
| Payments  on notes receivable                                                      |   | 46                                       |       | 48 |   |
| Land  purchased for investment                                                     |   | —                                   |       | (25 | ) |
| Sale  of land purchased for investment                                             |   | 99                                       |       | 43 |   |
| Net  cash provided by investing activities                                         |   | 105                                      |       | 40 |   |
|                                                                               |   |                                     |       |   |   |
| Net  decrease in cash and cash equivalents                                         |   | (595                                     | )          | (304 | ) |
| Beginning  cash and cash equivalents                                               |   | 767                                      |       | 329 |   |
|                                                                               |   |                                     |       |   |   |
| Ending  cash and cash equivalents                                                  |   | $                                        | 172        |   | $ | 25 |   |
|                                                                               |   |                                     |       |   |   |
| Supplemental  information:                                                         |   |                                     |       |   |   |
| Interest  paid                                                                     |   | $                                        | 1          |   | $ | 1 |   |
| Income  taxes paid, net of refunds                                                 |   | —                                   |       | — |   |
| Noncash  transactions:                                                             |   |                                     |       |   |   |
| Prepaid  operating lease                                                           |   | $                                        | —     |   | $ | 4 |   |
| Reacquisition  of investment property by cancellation of note receivable           |   | —                                   |       | 40 |   |
| Cumulative  effect of change in accounting principle                               |   | —                                   |       | 748 |   |
| Note  receivable issued for sale of land purchased for investment                  |   | 120                                      |       | — |   |

 

See accompanying notesto financial statements.

 

5

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T.J.T., INC.

NOTES TO FINANCIAL STATEMENTS

(unaudited)

 

NOTE A – BASIS OFPRESENTATION

 

*Unaudited Financial Statements*

 

In the opinion ofmanagement, the accompanying unaudited financial statements contain alladjustments (consisting solely of normal recurring adjustments) necessary topresent fairly the financial position of T.J.T., Inc. (the Company) and theresults of operations and cash flows. Certain reclassifications of prior quarter amounts were made to conformwith current quarter presentation, none of which affect previously recorded netincome.

 

*Stock Options*

 

The Company has a stockoption plan which allows officers, directors and key employees of the Companyto receive non-qualified and incentive stock options. The Company awarded50,000 stock options to directors during the quarter ended December 31, 2002with an exercise price of $.28.  Duringthe quarter ended March 31, 2003, the Company awarded 10,000 stock options withan exercise price of $.45 and 5,000 with an exercise price of $.46 todirectors. These options will become vested at a rate of 20 percent each yearfor a period of five years from the grant date.  As of March 31, 2003, 325,000 shares of stock were available forfuture option grants.

 

The Company accounts forits stock options under Accounting Principles Board (APB) Opinion No. 25 usingthe intrinsic value method.  Inaccordance with Financial Accounting Standards (SFAS) No. 148, *Accounting**for Stock-BasedCompensation – Transition and Disclosure*, pro-forma net income,stock-based compensation expense, and earnings per share using the fair valuemethod are stated as follows:

 
|                                                                                                           |   | **Three  Months Ended** |   | **Six Months  Ended** |   |
|----------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|-----------------------|--------|
| **(Dollars  in thousands)**                                                                                    |   | **Mar. 31,  2003**      |   | **Mar. 31,  2002**    |   | **Mar.31,  2003** |   | **Mar. 31,  2002** |   |
|                                                                                                           |   |                    |   |                  |   |   |   |   |   |
| Net income, as reported                                                                                        |   | $                       | (155   | )                     | $      | (146 | ) | $ | (149 | ) | $ | (987 | ) |
| Deduct:   stock-based employee compensation expense determined under fair value  based method, net of tax |   | (6                      | )      | (6                    | )      | (9 | ) | (6 | ) |
|                                                                                                           |   |                    |   |                  |   |   |   |   |   |
| Pro forma net income                                                                                           |   | $                       | (161   | )                     | $      | (152 | ) | $ | (158 | ) | $ | (993 | ) |
|                                                                                                           |   |                    |   |                  |   |   |   |   |   |
| Earnings per share:                                                                                            |   |                    |   |                  |   |   |   |   |   |
| Basic – as reported                                                                                       |   | $                       | (.03   | )                     | $      | (.03 | ) | $ | (.03 | ) | $ | (.22 | ) |
| Basic – pro forma                                                                                         |   | $                       | (.04   | )                     | $      | (.03 | ) | $ | (.04 | ) | $ | (.22 | ) |

 

6

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NOTE B - INVENTORIES

 

Inventories are stated atthe lower of cost (first-in, first-out and average cost methods) or market.

 
| **(Dollars in thousands)** |   | **Mar. 31,  2003** |   | **Sept. 30,  2002** |   |
|----------------------------|--------|--------------------|--------|---------------------|--------|
| Raw  materials             |   | $                  | 1,659  |                | $      | 1,363 |   |
| Finished  goods            |   | 1,581              |   | 1,230               |   |
| Total                      |   | $                  | 3,240  |                | $      | 2,593 |   |

 

NOTE C – PROPERTY, PLANTAND EQUIPMENT

 
| **(Dollars in thousands)**         |   | **Mar. 31,  2003** | ** ** | **Sept. 30,  2002** | ** ** |
|------------------------------------|--------|--------------------|------------|---------------------|------------|
| Land  and building                 |   | $                  | 386        |                | $          | 386 |   |
| Leasehold  improvements            |   | 389                |       | 386                 |       |
| Furniture  and equipment           |   | 1,125              |       | 1,102               |       |
| Vehicles  and trailers             |   | 1,105              |       | 1,142               |       |
|                               |   | 3,162              |       | 3,016               |       |
| Less  accumulated depreciation     |   | 2,376              |       | 2,317               |       |
| Net  property, plant and equipment |   | $                  | 629        |                | $          | 699 |   |

 

NOTE D - SHAREHOLDERS’EQUITY

 

Authorized stock of thecompany consists of 10,000,000 shares of $.001 par value common stock and5,000,000 shares of $.001 par value preferred stock.  No shares of preferred stock have been issued.

 

NOTE E – SEGMENTDISCLOSURE

 

The Company operates in two business segments: Axlesand Tire Reconditioning and Housing Accessories. These segments have beendetermined by evaluating the Company’s internal reporting structure and natureof products offered.

 

Axles and Tire Reconditioning: The Company providesreconditioned axles and tires to manufactured housing factories.

 

Housing Accessories: The Company provides skirting,siding, and other aftermarket accessories to manufactured housing dealers andcontractors.

 
| **(Dollars in thousands)**       |   | **Axle &  Tire  Reconditioning** |   | **Housing  Accessories** |   | **Total** |   |
|----------------------------------|--------|--------------------------------------|--------|--------------------------|--------|-----------|--------|
|                             |   |                                 |   |                     |   |      |   |
| Three  months ended Mar 31, 2003 |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating  revenue               |   | $                                    | 3,638  |                     | $      | 933       |   | $ | 4,571 |   |
| Operating  income (loss)         |   | (198                                 | )      | (94                      | )      | (292      | )      |
| Depreciation                     |   | 56                                   |   | 6                        |   | 62        |   |
|                             |   |                                 |   |                     |   |      |   |
| Three  months ended Mar 31, 2002 |   |                                 |   |                     |   |      |   |   |   |   |
|                             |   |                                 |   |                     |   |      |   |   |   |   |
| Operating  revenue               |   | $                                    | 3,897  |                     | $      | 1,011     |   | $ | 4,908 |   |
| Operating  income (loss)         |   | (109                                 | )      | (154                     | )      | (263      | )      |
| Depreciation                     |   | 72                                   |   | 20                       |   | 92        |   |
|                             |   |                                 |   |                     |   |      |   |
| Six  months ended Mar 31, 2003   |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 7,425  |                     | $      | 2,064     |   | $ | 9,489 |   |
| Operating income (loss)          |   | (199                                 | )      | (95                      | )      | (294      | )      |
| Depreciation                     |   | 96                                   |   | 24                       |   | 120       |   |
|                             |   |                                 |   |                     |   |      |   |
| Six  months ended Mar 31, 2002   |   |                                 |   |                     |   |      |   |
|                             |   |                                 |   |                     |   |      |   |
| Operating revenue                |   | $                                    | 7,212  |                     | $      | 2,091     |   | $ | 9,303 |   |
| Operating income (loss)          |   | (176                                 | )      | (266                     | )      | (442      | )      |
| Depreciation                     |   | 163                                  |   | 47                       |   | 210       |   |
|                                  |        |                                      |        |                          |        |           |        |  |  |  |  |

 

7

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The Company does not assign interest income, interestexpense, other expenses or income taxes to operating segments. Identifiableassets and related capital expenditures are assigned to operating locationsrather than operating segments, with depreciation allocated to the segmentsbased upon usage.

 

### **Item 2**. Management’s Discussion and Analysis of FinancialCondition and Results of  Operations

 

All period references areto the three or six month periods ended March 31, 2003 and 2002, unlessotherwise indicated.  Quarterlyfinancial results may not be indicative of the financial results for any futureperiod.  This Form 10-Q contains certainforward-looking statements which are based on management’s currentexpectations.  The forward-lookingstatements are subject to certain risks and uncertainties.  The words “believe,” “expect,” “anticipate,”“intend,” “estimate,” “will,” “should,” “could,” and other expressions thatindicate future events and trends identify forward-looking statements.  The Company has identified risk factorswhich could cause actual results to differ substantially from the forwardlooking statements.  These risk factorsinclude, but are not limited to, general economic conditions, changes in interestrates, availability of financing, real estate values, competitive pressure onboth the purchasing of used axles and tires from manufactured housing dealersand the selling of refurbished axles and tires to manufactured housingfactories, adverse weather conditions, the economic viability of our customersand vendors, changes in legislation or regulations, availability of qualifiedemployees, and the outcome of current legal proceedings.

 

T.J.T.,Inc. has two business lines: axle and tire reconditioning, and accessories andsiding distribution.

 

Axlesand tires are purchased from manufactured homes dealers and reconditioned infive locations in the western United States. After axles are reconditioned and certified and tires are inspected andgraded, they are sold primarily to manufactured housing factories.

 

Axleand tire reconditioning is performed at the Company’s locations in Emmett,Idaho; Centralia, Washington; Woodland, California; Platteville, Colorado; andPhoenix, Arizona.  The

 

8

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Companymaintains a manufacturing facility in Eugene, Oregon which manufactures metalhanger parts for attaching axles to manufactured homes and frame componentsused on manufactured home chassis.

 

TheCompany sells accessories to manufactured home dealers and set-up contractorsfrom its locations in Washington, Colorado, Idaho and Salem, Oregon.  The major product lines are vinyl skirting,piers, and related products through the Company’s distribution channels which compriseapproximately 650 dealers.  The Companyalso sells vinyl siding to the site-built construction industry out of itsEmmett, Idaho location.

 

**Results of Operations**

 

The following table setsforth the operating data of the company as a percentage of net sales for theperiods listed below:

 
|                                         |   | **Three  Months Ended** |   | **Six Months  Ended** |   |
|----------------------------------------------|--------|-------------------------|--------|-----------------------|--------|
|                                         |   | **Mar. 31,  2003**      |   | **Mar. 31,  2002**    |   | **Mar.31,  2003** |   | **Mar. 31,  2002** |   |
| Axle  and tire reconditioning                |   | 79.6                    | %      | 79.4                  | %      | 78.2 | % | 77.5 | % |
| Manufactured  housing accessories and siding |   | 20.4                    |   | 20.6                  |   | 21.8 |   | 22.5 |   |
| Gross  margin                                |   | 18.6                    |   | 19.3                  |   | 19.9 |   | 21.3 |   |
| Selling  expense                             |   | 16.8                    |   | 16.0                  |   | 16.0 |   | 16.9 |   |
| Administrative  expense                      |   | 8.1                     |   | 8.7                   |   | 6.1 |   | 9.1 |   |
| Interest  income                             |   | 0.2                     |   | 0.3                   |   | 0.2 |   | 0.3 |   |
| Other  income                                |   | 0.2                     |   | 0.0                   |   | 0.1 |   | 0.0 |   |
| Investment  property income (expense)        |   | 0.6                     |   | 0.5                   |   | 0.3 |   | 0.4 |   |

 

Themanufactured housing industry continues to experience lower production levelsas a result of more restrictive credit standards and continuation of excessiverepossessions.  In the Company’s marketarea manufactured housing shipments decreased 11 percent from the quarter endedMarch 31, 2002 to the quarter ended March 31, 2003 according to statistics fromthe National Conference of States on building Codes and Standards.   As a result, net sales declined 7 percent,to $4,571,000 in the quarter ended March 31, 2003, from $4,908,000 of sales inthe same period a year ago.

 

TheCompany’s overall gross margin was 18.6 percent for the quarter compared to19.3 percent for the same quarter in 2002.   The slight decrease is due to overall higher than usual health insuranceclaims and general insurance costs. Portions of these expenses are allocated to cost of sales.

 

Sellingand general administrative expenses decreased $69,000 during the quartercompared to the same period a year ago primarily as a result of decreased legalexpenses.  During the quarter endingMarch 31, 2002, the Company had incurred $61,000 of legal expenses to enforcethe non-compete agreements executed by certain former employees referred to as theBradley Group.

 

Netsales for the six month period ended March 31, 2003 compared to the same sixmonth period in 2002 increased 2 percent. Sales during the quarter ending December 31, 2002 were higher than salesin the comparable period in 2002 due to the elimination of direct competitionfrom the

 

9

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BradleyGroup.  In January of 2002, aninjunction was granted in favor of the Company prohibiting all members of theBradley Group from competing against the Company’s axle and tire business.

 

Grossmargin for the six month period ending March 31, 2003 decreased 1.4 percentfrom the same period a year ago.  Themajority of this decrease is due to higher health, worker’s compensation andgeneral insurance costs which rose 66 percent or $156,000 from the sameperiod  a year ago.  In addition, the Company’s fuel costs rose24 percent or $25,000 during the six month period compared to last year as aresult of higher fuel prices.  TheCompany allocated approximately 34 percent of insurance costs to the cost ofsales and the remaining 66 percent was allocated to selling and generaladministration expenses.  The Companyexpects the higher insurance costs to be partially offset by an increase insales prices during the next two quarters.

 

Sellingand general administrative expenses for the six months ended March 31, 2003decreased 10 percent from the comparable period in 2002.  The decrease for the six month period islargely due to higher legal expenses incurred in 2002 related to the BradleyGroup totaling $186,000.   Continuedefforts to reduce costs contributed to the decline as well.

 

## **Liquidity and Capital Resources**

 

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, 2003, theCompany has not borrowed on the line and is in compliance with all loancovenants.   The Company renewed the$350,000 line of credit on April 9, 2003 with the same financialinstitution.  The interest rate on thecredit line is the prime rate plus 1 percent.

 

**Item 3****.  Quantitative and Qualitative Disclosuresabout Market Risk**

 

TheCompany is not required to provide this information pursuant to Item 305(e) ofRegulation S-K.

 

**Item 4****.  Controls and Procedures**

 

 We maintain disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the Company’s Securities Exchange Act reports is recorded,processed, summarized and reported within the time periods specified in theSEC’s rules and forms, and that such information is accumulated andcommunicated to the Company’s management, including its Chief Executive Officerand Chief Financial Officer, as appropriate, to allow timely decisionsregarding required disclosure.  Indesigning and evaluating the disclosure controls and procedures, managementrecognized that any controls and procedures, no matter how well designed and operated,can provide only reasonable assurance of achieving the desired controlobjectives, as ours are designed to do, and management necessarily was requiredto apply its judgement in evaluating the cost-benefit relationship of possiblecontrols and procedures.

 

Duringthe 90-day period prior to the date of this report, an evaluation was performedunder the supervision and with the participation of our Company’s management,including the Chief

 

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ExecutiveOfficer and the Chief Financial Officer, of the effectiveness of the design andoperation of our disclosure controls and procedures.  Based upon our evaluation, the Chief Exectuve Officer and theChief Financial Officer concluded that our disclosure controls and procedureswere effective.  Subsequent to the dateof this evaluation, there have been no significant changes in the Company’sinternal controls or in other factors that could significantly affect these controls,and no corrective actions have been needed or taken with regard to significantdeficiencies or material weaknesses in such controls.

 

 

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

 

**Item 1.****  Legal Proceedings**

 

Nothing to Report

 

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

 

Nothing to report

 

### **Item 3.**  Defaults UponSenior Securities

 

Nothing to report

 

### **Item 4.**  Submission ofMatters to a Vote of Security Holders

 

On February 18, 2003, theannual meeting of the shareholders was held. Holders of common stock were asked to vote on the following items:

 

To elect two Directors toserve until the annual meeting of shareholders in 2006.  The shareholders elected the followingDirectors, with the votes indicated opposite each Director’s name:

 
|               |   | **For**   |   | **Against** |   | **Withheld** |   |
|--------------------|--------|-----------|--------|-------------|--------|--------------|--------|
|               |   |      |   |        |   |         |   |
| Larry  B. Prescott |   | 4,640,690 |   | —      |   | 38,350       |   |
| Robert  B. Siegel  |   | 4,640,690 |   | —      |   | 38,350       |   |

 

**Item 5.****  Other Information**

 

Nothingto report

 

**6.  Exhibits and Reports on Form8-K**

 

(a)                                   Exhibit 99.1 Certification Pursuant to 18U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-OxleyAct of 2002.

Exhibit99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.

 

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(b)                                  Noreports on Form 8-K were filed during the quarter ended March 31, 2003.

 

## **SIGN**ATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has causedthis report to be signed on its behalf by the undersigned hereunto dulyauthorized.

 
|   |         | T.J.T., INC.                                                           |
|--------|--------------|------------------------------------------------------------------------|
|   |         | Registrant                                                             |
|   |         |                                                                   |   |
| Date:  | May 14, 2003 | By:                                                                    | /s/Larry B. Prescott |
|   |         | Larry B. Prescott,  Senior Vice President and  Chief Financial Officer |

 

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**CERTIFICATIONPURSUANT TO**

**18 U.S.C.SECTION 1350,**

**AS ADOPTEDPURSUANT TO**

**SECTION 30****2(a) OF THESARBANES-OXLEY ACT OF 2002**

 

I,Terrence J. Sheldon, certify that:

 

1.               I have reviewed this quarterly report on Form10Q of T.J.T., Inc.;

 

2.               Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.               Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.               The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

a)                                      designed such disclosure controls and proceduresto ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this quarterly report is beingprepared;

 

b)                                     evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the Evaluation Date); and

 

c)                                      presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions):

 

a)                                      all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

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b)                                     any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifying officersand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| /s/  Terrence J. Sheldon |   |
|--------------------------|--------|
| Terrence  J. Sheldon     |
| Chief  Executive Officer |
| May  14, 2003            |

 

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**CERTIFICATIONPURSUANT TO**

**18 U.S.C.SECTION 1350,**

**AS ADOPTEDPURSUANT TO**

**SECTION302(a) OF THE SARBANES-OXLEY ACT OF 2002**

 

I,Larry B. Prescott, certify that:

 

1.               I have reviewed this quarterly report on Form10Q of T.J.T., Inc.;

 

2.                   Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.               Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.               The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

a)                                      designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

 

b)                                     evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this report (the Evaluation Date); and

 

c)                                      presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors  (or persons performing the equivalentfunctions):

 

a)                                      all significant deficiencies in the design oroperation of internal controls which could adversely affect the registrant’sability to record, process, summarize and report financial data and haveidentified for the registrant’s auditors any material weaknesses in internalcontrols; and

 

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b)                                     any fraud, whether or not material, thatinvolves management or other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifying officersand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| /s/  Larry B. Prescott   |   |
|--------------------------|--------|
| Larry  B. Prescott       |
| Chief  Financial Officer |
| May  14, 2003            |

 

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