CONOLOG REPORTS RESULTS FOR THE SIX MONTHS
ENDED JANUARY 31, 2010
Somerville, NJ – March 22, 2010:Conolog Corporation (NASDAQ: CNLGD) announced today the results for the six months ended January 31, 2010.
Product revenues for the six months ended January 31, 2010 was $580,016 a decrease of $365,624 for the same period ended January 31, 2009. The Company attributes this as a result of customer delivery requirements.
Cost of Goods Sold (Materials and Labor) during the six month period ended January 31, 2010 increased by $59,627 as a result of production delays and rescheduling of shipments.
Gross Profit for the six months ended January 31, 2010 and 2009 were $286,026 and $711,277 respectively. This decrease of $425,251 was directly related to the change in customer delivery schedules and related documentation in the second quarter ended January 31, 2010 when the Gross Profit decreased by $343,815.
Total Selling, general and administrative expenses for the six months ended January 31, 2010 and 2009 amounted to $3,257,251 and $1,133,547 respectively. This increase of $2,123,884 included the amortization of a non-cash expense of $2,054,443 for the 2009 stock incentive grant to employees, officers and directors.
Other non-cash non-operating expenses for the current six month period totaled $5,455,306 and consisted mainly of non-cash costs related to recording equity derivatives on debt in the amount of $5,306,521; and induced conversion cost of $150,201. Non-cash non-operating expenses for the three month period ended January 31, 2010 was $1,456,397. Subsequent to January 31, 2010, all remaining debt and warrants were converted, resulting in the recapturing of equity derivative expenses recorded at January 31, 2010.
As a result of the foregoing, the Company reported a net loss from operations of ($8,426,531) or ($2.93) per share compared to a loss of ($665,744) or ($0.21) per share for the six months ended January 31, 2010 and 2009, respectively. Loss per share of common stock included the weighted average of 1,929,032 common stock purchase warrants for the six months ended January 31, 2010.
About Conolog Corporation
Conolog Corporation is a provider of digital signal processing and digital security solutions to electric utilities worldwide. The Company designs and assembles electromagnetic products to the military and provides engineering and design services to a variety of industries, government organizations and public utilities nationwide. The Company’s INIVEN division is a provider of a line of digital signal processing systems, including transmitters, receivers and multiplexers.
Forward-looking statements in this release are made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the Company’s products, increased levels of competition, new products introduced by competitors, and other risks detailed from time to time in the Company’s periodic reports filed with the Securities and Exchange Commission.
CONOLOG CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
| ASSETS | | | | | | | | |
| | | | January 31, 2010 | | | | July 31, 2009 | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 547,890 | | | $ | 27,358 | |
| Accounts receivable, net of allowance | | | 63,260 | | | | 245,980 | |
| Prepaid expenses | | | 42,680 | | | | 70,843 | |
| Prepaid service agreements | | | 498,200 | | | | - | |
| Current portion of note receivable | | | 14,864 | | | | 14,864 | |
| Inventory | | | 1,484,351 | | | | 1,395,452 | |
| Other current assets | | | 328,546 | | | | 551,937 | |
| Total Current Assets | | | 2,979,791 | | | | 2,306,434 | |
| |
| Property and equipment: | | | | | | | | |
| Net Property and Equipment | | | 420,765 | | | | 396,704 | |
| |
| Other Assets: | | | | | | | | |
| Other non-current assets | | | 223,411 | | | | - | |
| Deferred financing fees, net of amortization | | | 134,539 | | | | 8,445 | |
| Note receivable, net of current portion | | | 68,239 | | | | 69,846 | |
| Total Other Assets | | | 426,189 | | | | 78,291 | |
| |
| TOTAL ASSETS | | $ | 3,826,745 | | | $ | 2,781,429 | |
| |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| |
| Current Liabilities: | | | | | | | | |
| Accounts payable | | $ | 117,875 | | | $ | 217,456 | |
| Accrued expenses | | | 10,097 | | | | 26,132 | |
| Derivative Liability | | | 557,466 | | | | | |
| Current Convertible debenture, net of discount | | | - | | | | 34,318 | |
| Total Current Liabilities | | | 685,438 | | | | 277,906 | |
| |
| Non-Current Liabilities: | | | | | | | | |
| |
| Convertible debenture, net of discount | | $ | 45,132 | | | | - | |
| Total Liabilities | | | 730,570 | | | | 277,906 | |
| |
| Stockholders' Equity: | | | | | | | | |
| Preferred stock, par value $.50; Series A; 4% cumulative; | | | | | | | | |
| 500,000 shares authorized;155,000 shares issued and outstanding | | | 77,500 | | | | 77,500 | |
| Preferred stock, par value $.50; Series B; $.90 cumulative; 500,000 | | | | | | | | |
| 500,000 shares authorized; 1,197 shares issued and outstanding | | | 597 | | | | 597 | |
| Common stock, par value $0.01; 30,000,000 shares authorized; | | | | | | | | |
| 4,468,787 and 1,842,485 shares issued and outstanding at | | | | | | | | |
| January 31, 2010 and July 31, 2009 respectively | | | 44,688 | | | | 18,425 | |
| Contributed capital | | | 60,705,267 | | | | 52,385,432 | |
| Accumulated deficit | | | (57,600,143 | ) | | | (49,173,964 | ) |
| Treasury shares at cost - 2 shares | | | (131,734 | ) | | | (131,734 | ) |
| Deferred compensation | | | - | | | | (672,733 | ) |
| |
| Total Stockholders’ Equity | | | 3,096,175 | | | | 2,503,523 | |
| |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 3,826,745 | | | $ | 2,781,429 | |
The accompanying notes are an integral part of the condensed consolidated financial statements
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CONOLOG CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Operations (Unaudited)
| | | | For the Three Months | | | | For the Six Months | |
| | | | Ended Janaury 31, | | | | Ended Janaury 31, | |
| | | | 2010 | | | | 2009 | | | | 2010 | | | | 2009 | |
| OPERATING REVENUES | | | | | | | | | | | | | | | | |
| Product revenue | | $ | 111,920 | | | $ | 488,959 | | | $ | 580,016 | | | | 945,640 | |
| |
| Cost of product revenue | | | | | | | | | | | | | | | | |
| Cost of goods sold | | | 97,107 | | | | 130,331 | | | | 293,990 | | | | 234,363 | |
| Total Cost of product revenue | | | 97,107 | | | | 130,331 | | | | 293,990 | | | | 234,363 | |
| |
| Gross Profit (Loss) from Operations | | | 14,813 | | | | 358,628 | | | | 286,026 | | | | 711,277 | |
| Selling, general and administrative expenses | | | | | | | | | | | | | | | | |
| General and administrative (includes non-cash stock grants) | | | 2,002,097 | | | | 507,610 | | | | 2,751,999 | | | | 880,684 | |
| Research and development | | | 30,915 | | | | 1,720 | | | | 51,323 | | | | 27,380 | |
| Professional fees | | | 194,533 | | | | 55,852 | | | | 317,967 | | | | 121,953 | |
| Marketing and trade shows | | | 76,416 | | | | 48,947 | | | | 135,962 | | | | 103,350 | |
| Total selling, general and administrative expenses | | | 2,303,961 | | | | 614,129 | | | | 3,257,251 | | | | 1,133,367 | |
| Loss Before Other Income (Expenses) | | | (2,289,148 | ) | | | (255,501 | ) | | | (2,971,225 | ) | | | (422,090 | ) |
| OTHER INCOME (EXPENSES) | | | | | | | | | | | | | | | | |
| Interest expense | | | (470,531 | ) | | | (14,140 | ) | | | (3,558,855 | ) | | | (69,274 | ) |
| Interest income | | | 556 | | | | 2,483 | | | | 1,416 | | | | 13,812 | |
| Other Income | | | - | | | | 355,267 | | | | - | | | | 355,267 | |
| Change in Fair Market value of derivatives | | | (853,134 | ) | | | - | | | | (1,678,621 | ) | | | - | |
| Induced conversion cost | | | (118,993 | ) | | | (25,406 | ) | | | (150,201 | ) | | | (205,911 | ) |
| Amortization | | | (33,634 | ) | | | (168,774 | ) | | | (69,045 | ) | | | (337,548 | ) |
| Total Other Income (Expense) | | | (1,475,736 | ) | | | 149,430 | | | | (5,455,306 | ) | | | (243,654 | ) |
| Loss before provision for income taxes | | | (3,764,884 | ) | | | (106,071 | ) | | | (8,426,531 | ) | | | (665,744 | ) |
| Provision for income taxes | | | - | | | | - | | | | - | | | | - | |
| NET LOSS | | $ | (3,764,884 | ) | | $ | (106,071 | ) | | $ | (8,426,531 | ) | | $ | (665,744 | ) |
| Preferred stock dividends | | $ | (1,045 | ) | | $ | - | | | $ | (2,090 | ) | | $ | - | |
| NET LOSS APPLICABLE TO COMMON SHARES | | $ | (3,765,929 | ) | | $ | (106,071 | ) | | $ | (8,428,621 | ) | | $ | (665,744 | ) |
| NET LOSS PER BASIC AND DILUTED COMMON SHARE | | $ | (0.99 | ) | | $ | (0.03 | ) | | $ | (2.93 | ) | | $ | (0.21 | ) |
| WEIGHTED AVERAGE NUMBER OF COMMON | | | | | | | | | | | | | | | | |
| SHARES OUTSTANDING | | | 3,798,852 | | | | 3,127,079 | | | | 2,879,293 | | | | 3,123,736 | |
The accompanying notes are an integral part of the condensed consolidated financial statements
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