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, 1996
[ ] 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 8, 1996 there were outstanding 1,481,766 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 Sheet
September 30, 1996 (Unaudited)
Statements of Earnings
Three and nine months ended
September 30, 1996 and 1995 (Unaudited)
Statements of Cash Flows
Nine months ended
September 30, 1996 and 1995 (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 SHEET
SEPTEMBER 30,1996
(unaudited)
ASSETS
CURRENT ASSETS
Cash & cash equivalents $ 446,105
Accounts receivable, less
allowances for doubtful accounts 665,513
Inventory 1,081,111
Prepaid expenses 118,658
Deferred Income Taxes 80,000
--------------------
TOTAL CURRENT ASSETS 2,391,387
PROPERTY, PLANT AND EQUIPMENT, less
accumulated depreciation and amortization 1,169,603
OTHER ASSETS 44,402
--------------------
$ 3,605,392
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 203,064
Accrued expenses 120,038
Current maturities of long-term debt 46,345
--------------------
TOTAL CURRENT LIABILITIES 369,447
LONG-TERM DEBT, less current maturities 1,007,281
SHAREHOLDERS' EQUITY
Common stock, par value $.01 per share
1,636,566 issued and 1,481,766 outstanding 16,366
Capital in excess of par value 2,751,988
Accumulated deficit (438,597)
Less treasury stock, at cost, (154,800 shares) (101,093)
--------------------
2,228,664
--------------------
TOTAL LIABILITIES AND SHAREHOLDER'S' EQUITY $ 3,605,392
====================
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,
----------------------- -----------------------
1996 1995 1996 1995
----------- ---------- ---------- ------------
NET SALES $ 1,265,191 $ 959,169 $ 3,169,648 $ 2,854,691
COST OF SALES 601,538 437,706 1,462,684 1,256,402
----------- ---------- ----------- ------------
GROSS PROFIT 663,653 521,463 1,706,964 1,598,289
----------- ---------- ----------- ------------
OPERATING EXPENSES
Research and development 53,213 65,860 177,625 209,919
Selling, G&A 419,524 386,741 1,333,726 1,228,554
----------- --------- ----------- ------------
472,737 452,601 1,511,351 1,438,473
----------- --------- ----------- ------------
Operating Income 190,916 68,862 195,613 159,816
----------- --------- ----------- ------------
OTHER INCOME (EXPENSE)
Rental Income 12,048 12,048 36,146 36,146
Interest Income 3,088 4,838 9,207 14,400
Interest Expense (28,444) (29,996) (86,178) (86,897)
------------ ---------- ----------- ------------
Income before income taxes 177,608 55,752 154,788 123,465
Provision for income taxes 2,500 1,700 2,500 4,000
------------ ---------- ----------- -----------
NET INCOME $ 175,108 $ 54,052 $ 152,288 $ 119,465
============ ========== =========== ===========
NET INCOME PER SHARE $ 0.12 $ 0.04 $ 0.10 $ 0.08
============ ========== =========== ===========
Average number of shares 1,489,932 1,511,566 1,492,688 1,511,566
============= ========== =========== ===========
The accompanying notes are an integral part of this financial statement
TELEBYTE TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended September 30,
--------------------------
1996 1995
--------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 152,288 $ 119,465
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 65,475 38,474
Decrease (increase) in assets:
Accounts receivable (200,525) (55,016)
Inventories (117,207) 89,345
Prepaid expenses and other (28,454) 108,406
Increase (decrease) in liabilities:
Accounts payable 82,780 (64,504)
Accrued expenses (28,168) 28,403
----------- ----------
Net cash provided by (used in)
operating activities (73,811) 264,573
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was paid for:
Property and equipment (36,616) (65,554)
---------- ----------
Net cash used in investing activities (36,616) (65,554)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from:
Financing capital assets 26,257
Cash was used for:
Purchase Treasury Stock (15,148)
Principal payments of long-term debt (37,787) (41,300)
----------- ----------
Net cash used in financing activities (52,935) (15,043)
----------- ----------
Net increase (decrease) in cash and
cash equivalents (163,362) 183,976
Cash and cash equivalents at
beginning of period 609,467 439,377
----------- ----------
Cash and cash equivalents at
end of period $ 446,105 $ 623,353
============ ==========
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, 1996, 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
accrual adjustments) necessary to present fairly the financial position, results
of operations and cash flows at September 30, 1996 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,
1995. The results of operations for the period ended September 30, 1996 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, 1996 increased 32% to $1,265,191
compared to sales of $ 959,169 for the same period in 1995, and sales of $
965,056 for the second quarter of 1996. The higher sales level can be attributed
to the success of increased promotional activities during the first half of 1996
and the shipment of a $170,000 order of interface converters which was disclosed
at the Companys annual meeting in July 1996.
Cost of sales for the third quarter of $601,538 or 47.5% of sales increased
compared to $437,706 or 45.6% of sales during the same period in 1995 and 44% of
sales for the second quarter of 1996. The decrease in the Companys gross profit
margin was primarily a function of product mix.
Selling, general and administrative expenses of $419,524 increased compared to
$386,741, however, as a percentage of sales SG&A decreased to 33.2% as compared
to 40.3% for the same period in 1995 and decreased from $459,114 in the second
quarter of 1996, a 9% decrease. The Company continues to increase its
promotional activities in an effort to boost sales and as such has embarked on a
sales campaign based upon increased catalog distribution. In prior years the
Company distributed approximately 125,000 catalogs. Through November 8, 1996 the
Company has distributed approximately 260,000 catalogs with 100,000 of these
having been mailed at the beginning of the fourth quarter. The Company expects
to expand this sales program in 1997.
Research and development expenses decreased to $53,213 compared to $65,860 for
the third quarter of 1995 and $65,009 in the second quarter of 1996. During the
third quarter, the Company continued development of several advanced data
communications products. The first of these, an HDSL (High Datarate Subscriber
line) modem is expected to be introduced in the fourth quarter of 1996.
Interest income decreased to $3,088 and $9,207 for three and nine months ended
September 30, 1996, compared to $4,838 and $14,400 for the comparable periods
ended September 30, 1995. The decrease reflects lower levels of short term
investments of cash equivalents. Net income of $175,108 for the third quarter
increased compared to $54,052 for the third quarter of 1995. The increase can be
primarily attributed to higher sales during the third quarter.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities of $163,362 was used primarily to fund
increased levels of inventory and accounts receivable due to increased sales
revenues. Working capital increased to $2,021,940 at September 30, 1996, an
increase of $130,106 from December 31 1995. The current ratio at September 30,
1996 decreased to 6.5 to 1 compared to 7.0 to 1 at December 31, 1995. The
Company maintains a $1,000,000 line of credit with Merrill Lynch effective July
1, 1996 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) Exhibit 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 8, 1996 By:
Joel A. Kramer
President, Chief Executive Officer
and Chief Financial Officer