United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X]Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarter ended September 30, 1995
{]Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period from to
Commission File Number: 0-11883
TELEBYTE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 11-2510138
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
270 Pulaski Road, Greenlawn, New York 11740
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (516) 423-3232
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of November 14, 1995 there were outstanding 1,511,566 shares of Common Stock,
$.01 par value.
Transitional Small Business Disclosure Format (check one);
Yes No X
TELEBYTE TECHNOLOGY, INC.
INDEX
Part I Financial Information
Item 1. Financial Statements
Balance Sheets
September 30, 1995 (Unaudited)
Statements of Earnings
Three and nine months ended
September 30, 1995 and 1994 (Unaudited)
Statements of Cash Flows
Nine months ended
September 30, 1995 and 1994 (Unaudited)
Condensed Notes to Financial
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation.
Part II Other Information
Part I
Financial Information
Item 1. Financial Statements
TELEBYTE TECHNOLOGY, INC.
BALANCE SHEETS
September 30,1995
ASSETS (unaudited)
CURRENT ASSETS
Cash & cash equivalents $ 623,353
Accounts receivable, less
allowances for doubtful accounts 466,759
Inventory 962,712
Prepaid expenses 40,625
Deferred Income Taxes 80,000
--------------------
TOTAL CURRENT ASSETS 2,173,449
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,185,374
OTHER ASSETS 48,603
--------------------
$ 3,407,426
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 76,713
Accrued expenses 91,615
Current maturities of long-term debt 47,165
--------------------
TOTAL CURRENT LIABILITIES 215,493
LONG-TERM DEBT, less current maturities 1,074,250
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,636,566 issued and 1,511,566 outstanding 16,366
Capital in excess of par value 2,751,988
Accumulated deficit (573,013)
Less treasury stock, at cost,
(125,000 shares) (77,658)
--------------------
2,117,683
--------------------
TOTAL LIABILITIES AND SHAREHOLDER'S' EQUITY $ 3,407,426
====================
The accompanying notes are an integral part of this financial
statement.
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF EARNINGS
(Unaudited)
Three Months Nine
Months
Ended September 30, Ended
September
30,
--------------------------------------- ------------------------------------------
1995 1994 1995 1994
------------------ ------------------ ------------------- --------------------
NET SALES $ 959,169 $ 1,007,701 $ 2,854,691 $ 2,865,163
COST OF SALES 437,706 457,624 1,256,402 1,283,790
------------------ ------------------ ------------------- --------------------
GROSS PROFIT 521,463 550,077 1,598,289 1,581,373
------------------ ------------------ ------------------- --------------------
OPERATING EXPENSES
Research and development 65,860 68,964 209,919 182,913
Selling, general and administrative 386,741 387,085 1,228,554 1,145,503
------------------ ------------------ ------------------- --------------------
452,601 456,049 1,438,473 1,328,416
------------------ ------------------ ------------------- --------------------
Operating Income 68,862 94,028 159,816 252,957
------------------ ------------------ ------------------- --------------------
OTHER INCOME (EXPENSE)
Rental Income 12,048 12,048 36,146 24,097
Interest Income 4,838 4,176 14,400 7,495
Interest Expense (29,996) (34,519) (86,897) (100,758)
------------------ ------------------ ------------------- --------------------
Income before income taxes 55,752 75,733 123,465 183,791
Provision for income taxes 1,700 3,800 4,000 8,500
------------------ ------------------ ------------------- --------------------
NET INCOME (LOSS) $ 54,052 $ 71,933 $ 119,465 $ 175,291
================== ================== =================== ====================
NET INCOME PER SHARE
$0.04 $0.05 $ 0.08 $0.11
================== ================== =================== ====================
Average number of shares 1,511,566 1,519,899 1,511,566 1,531,010
================== ================== =================== ====================
The accompanying notes are an integral part of this financial statement
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine
Months
Ended
September
30,
------------------------------------------
1995 1994
------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 119,465 $ 175,291
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 38,474 38,429
Decrease (increase) in assets:
Accounts receivable (55,016) (46,814)
Inventories 89,345 (115,742)
Prepaid expenses and other 108,406 (6,814)
Increase (decrease) in liabilities:
Accounts payable (64,504) (108,186)
Accrued expenses 28,403 48,181
------------------- --------------------
Net cash provided by (used in)
operating activities 264,573 (15,655)
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was paid for:
Property and equipment 65,554 66,788
------------------- --------------------
Net cash used in investing activities (65,554) (66,788)
------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from:
Financing capital assets 26,257 20,350
Cash was used for:
Purchase Treasury Stock 0 22,658
Principal payments of long-term debt 41,300 28,858
------------------- --------------------
Net cash used in financing activities (15,043) (31,166)
------------------- --------------------
Net increase (decrease) in cash and
cash equivalents 183,976 (113,609)
Cash and cash equivalents at
beginning of period 439,377 545,508
------------------- --------------------
Cash and cash equivalents at
end of period $ 623,353 $ 431,899
=================== ====================
The accompanying notes are an integral part of this financial
statement.
TELEBYTE TECHNOLOGY, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The balance sheet as of September 30, 1995, the statement of earnings for the
three and nine months then ended and the statements of cash flows for the nine
month period then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at September 30, 1995 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's annual report to shareholders for the fiscal year ended
December 31, 1994. The results of operations for the period ended September 30,
1995 are not necessarily indicative of the operating results for the full year.
Item 2.Management's Discussion and Analysis of Financial Condition or Plan of
Operation.
RESULTS OF OPERATIONS
Sales for the third quarter ended September 30, 1995 decreased 5% to $ 959,169
compared to sales of $1,007,701 for the same period in 1994, and sales of
$1,010,590 for the second quarter of 1995. This decrease can be attributed to a
poor response to a major direct mail campaign during the second quarter of 1995.
In addition, several larger orders were delayed in placement and subsequently
affected sales in the third quarter.
Cost of sales for the third quarter of $437,706 or 45.6% of sales increased
compared to $457,624 or 45.4% of sales during the same period in 1994 and 43.2%
of sales for the second quarter of 1995. The increase was due primarily to the
lower margins from the sale of discontinued video products.
Selling, general and administrative expenses of $386,741 decreased slightly
compared to $387,085 for the same period in 1994 and decreased from $443,568 in
the second quarter of 1995, a 13% decrease. The decrease from the second quarter
of 1995 reflects lower direct marketing expenses compared to the third quarter
of 1995.
Research and development expenses decreased to $65,860 compared to $68,964 for
the third quarter of 1994 and $76,021 in the second quarter of 1995. The Company
continues the development of several new products, including an HDSL (High
Datarate Subscriber Line) modem. The HDSL technology allows for high speed data
transmission, T1 speeds, over greater distances than previously attainable. T1
service is growing in popularity since the requirement to interconnect Local
Area Networks (LAN's) is dramatically increasing. The first product is expected
to be introduced in the second quarter of 1996. Another major effort is the
development of a media converter for LAN's that will operate at the new 100
million bits per second rate, referred to as 100 BASE-T or Fast Ethernet. This
media converter allows Fast Ethernet systems to use fiber optic cables for error
free data transmission. This product, called the Model 372 is expected to start
shipping in the first quarter of 1996.
During 1995, the Company has developed a display technology which it believes is
a significant feature for its power stealing short haul modems and interface
converters. A patent application has been submitted to cover this LCD display
concept. The display will provide the user with operational status of the
communications link. The Company expects eight new products which will be
introduced in the first half of 1996 that incorporate this display feature and
another which is being introduced in the last quarter of 1995. It is anticipated
that additional products will be introduced with this LCD display. Promotional
support for these new products will begin in January of 1996.
Interest income increased to $4,838 and $14,400 for three and nine months ended
September 30, 1995, compared to $4,176 and $7,495 for the comparable periods
ended September 30, 1994. The increase reflects higher yields on short term
investments of cash equivelents. Net income of $54,052 for the third quarter
decreased compared to $71,933 for the third quarter of 1994. The decrease can be
primarily attributed to lower than expected sales during the third quarter.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $264,573 compared to net cash used
of $15,655 for the same period in 1994. This improvement resulted from reduced
inventory levels and utilization of prepaid expenses. Working capital increased
to $1,957,956 at September 30, 1995, an increase of $160,452 from December 31
1994. The current ratio at September 30, 1995 increased to 10.1 to 1 compared to
8.1 to 1 at December 31, 1994. The Company maintains a $1,000,000 line of credit
with Merrill Lynch effective July 1, 1995 for one year. The Company has no
amounts outstanding under the line of credit at this time. The Company considers
it's working capital to be adequate to fund presently foreseeable working
capital requirements.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits no. 27 - Financial Data Schedule
(b) Reports on Form 8-K - None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELEBYTE TECHNOLOGY, INC.
(Registrant)
Dated: November 14, 1995 By:
Joel A. Kramer
President, Chief Executive Officer
and Chief Financial Officer